IATA AGM: Turkish Airlines in talks with American OEM Boeing for 225 aircraft order
Announcement comes on the back of a 385 aircraft deal with European plane maker Airbus
Dubai: Turkey’s national carrier, Turkish Airlines, is in talks with American jet manufacturer Boeing Co. to purchase 250 aircraft, the airline’s Chairman of the Board and Executive Committee, Ahmet Bolat, told media in Dubai on Tuesday.
Bolat said on the sidelines of the International Air Travel Association’s (IATA) annual general meeting (AGM) that the airline is discussing target prices, commercial terms, and the cost of engines for 150 MAX narrow-bodies and 75 Boeing 787 widebodies.
The announcement from Turkish Airlines comes on the back of a major deal with European plane maker Airbus. Bolat said, “We finished with Airbus. We have ordered 385 aircraft; some are fixed, and some are options. So, with Airbus, should we exercise our options or not? That is the question, but it will happen after three to four years,” he said.
Bolat said the airline, which has a fleet of 455 aircraft from Boeing and Airbus, has ambitions to double its total fleet size to 810 jets in ten years. The airline chairman said the order could go to Airbus, given Boeing’s ongoing production challenges. He explained, “With our current fleet and Airbus order, we can reach the target of 810 aircraft if we don’t replace any of our existing fleet.”
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However, the airline has adopted a plan to “split the risks because right now, Boeing has some production problems, which might happen to Airbus sometime later. Therefore, we want to mitigate the risks by using both products available in the market,” he said. That said, the airline chief is confident that the American OEM will resolve its issues soon. “Boeing is taking strong steps and measures, changing even the top management, and I’m really that Stephanie (Pope, Boeing’s new COO) will handle current issues,” Bolat said.
Over the last 20 years, the airline has expanded its fleet 6.7 times with orders for 424 aircraft, including 126 widebody, 281 narrow-body, and 17 freighters.
“In 2023, we had had a fleet of 65 aircraft. In 10 years, we will grow it to 810 aircraft… We are pretty much confident that we can do it. Our average growth rate in the last 20 years is 12.3 per cent, almost three times more than IATA’s average. Every year in the past 20 years, Turkish Airlines had profit… except in 2016 and 2020. Our growth is sustainable,” he said.
‘Order depends on engine prices’
Bolat said the talks for Boeing are at the tender phase, and there’s no timeline for a final agreement. The deal for the aircraft is subject to engine availability and prices, he explained. Boeing primarily uses engines from General Electric (GE) and Pratt and Whitney, while Airbus uses engines from GE, Pratt and Whitney, and Rolls-Royce.
“The Boeing product has an engine issue in the MAXs. In the Airbus, you can choose (Pratt and Whitney’s) geared turbofan (GTF) or (CFM International’s) LEAP. In Airbus, you don’t have to rush. We wait for developments in P&W, how CFM will put itself in the market with cost and so on… However, Airbus slots are very important, so we secured earlier slots by replacing our order. In the MAX, you only have one engine… the CFM engine. Therefore, the MAX engine depends on CFM prices,” he said.
Bolat said Turkish Airlines currently has 28 of its Airbus A321-200NX and five of its nine A320-200Ns out of service due to required engine inspections following the discovery of contaminants in powdered metal used in the manufacturing process.
“What is good is that the problem is not getting worse. The problem is somehow confined,” he said. “Unfortunately, we are hearing some reports about other engine types. Unfortunately, there is little space besides the LEAP ones in the market. These engines are 15 per cent more fuel efficient with advanced technologies, but advancements often come with expected issues,” he added. Bolat said the airline expected the GTF engines, which deploy new technology, to perform well while advancing existing technology, yielding fuel efficiency benefits. “The main concern is durability,” he said.
Bolat is confident that the advanced programs designed by Pratt & Whitney will take effect in two years and address these problems and supply chain issues. “In two years, we expect the problems to be resolved and will seek compensation for our losses from the producer, as per our contract,” he added.
2023 performance
Last year, the airline carried more than 83 million passengers and 1.9 million tonnes of cargo. This year, Turkish Airlines expects to carry 90 million passengers, said Bolat. The airline, listed on Turkey’s Borsa Istanbul Exchange, 's 2023 profit, including investment activities, hit $4 billion, up from $3.2 billion in 2022.
The airline hopes to increase the numbers of its point-to-point traffic over connecting passengers and increase the volume of travellers arriving from the Middle East. “Turkey had about 4.5 million visitors from the Middle East, said Bolat. Our split between point-to-point traffic and connecting traffic is about 40:60,” he added.
Turkish Airline subsidiary AJet, formerly branded as AnadoluJet until March 31 this year, is also performing well, according to Bolat. However, the lack of new aircraft has also impacted the airline’s growth. “We signed leases for 36 new generation MAXs. We expected this to come, but they could not deliver it. In two years, the number of new generation aircraft would be 85 per cent in AJet, which it is currently getting from Turkish Airlines. The number of wet leases will be halved, and the other half would be new aircraft,” he added. He also said the airline faces limited operational issues and is experiencing robust demand from Turkey’s Sabiha Gökçen International Airport. “By 2033, the AJet fleet will be 200,” he added.