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Turkish Airlines is flying, it just keeps growing, and growing

Posted on 14 February 2011

Date: 15/10/2008
Turkish Airlines is flying, it just keeps growing, and growing

TAKEOFF: As other carriers cancel orders because of the global financial crisis, Turkish Airlines will purchase at least 25 wide-body jetliners

In a year when more than two dozen airlines collapsed due to record costs and the crippling credit crunch, the Turkish Airlines is unfazed, announcing its plan to buy as many as 105 planes from Boeing and Airbus by 2023

A LONG-TERM DECISION

“Such a purchase will increase THY’s units at least to 180 at the end of 15 years. If the company also gets optional purchases, then its units will double in 15 years. This is not an aggressive decision, as the Turkish market has an annual growth rate of 15 percent,” says Cemal Demirtas, an aviation analyst at OYAK.

STRONG FUNDAMENTALS

“The Turkish economy is growing fast and we expect that market to grow briskly in the next 20 years, at about 2 to 2.5 times the average for Europe. There is both strong tourism and good business traffic, and the Turkish market is expanding for good fundamental reasons,” says Randy Tinseth, Boeing Commercial Airplanes Vice President.

GOOD PRICES ON ORDERS

“The market for planes has been weakening as the number of carriers diminishes. I would think you could get reasonably good prices on orders,” says Douglas McNeill, an analyst at Blue Oar Securities in London.

As the aviation world suffers from high costs and a crippling global credit crunch, Turkish Airlines seems unfazed. The state-controlled airline yesterday announced a plan to buy as many as 105 planes from Boeing and Airbus by 2023.

As other carriers cancel orders because of the global financial crisis, Turkish Airlines, or THY, will purchase at least 25 wide-body jetliners, with an option to add a further 10, according to a statement from the company. The carrier also aims to buy 50 to 70 single-aisle planes and has asked the world’s two largest aircraft manufacturers to submit bids.

THY’s fleet expansion comes as the industry struggles with high energy prices, a global financial crisis and consumers increasingly nervous about their purchasing power.

“The THY administration attached utmost importance to the timing of this tender. THY is entering the global crisis and the approaching recession in a strong position both commercially and financially,” the company said.

The tender is part of a previously announced 15-year plan, set to start in 2009, to sharply expand the THY fleet and its number of destinations. The airline currently has 115 aircraft.

Strong growth in Turkey:

“The decision will increase THY’s units by at least to 180 by the end of 15 years,” said Cemal Demirtas, an aviation analyst at OYAK, the Turkish Armed Forces Assistance Fund. “If the company also gets optional purchases, then its units will double in 15 years. This is not an aggressive decision since the Turkish market has an annual growth rate of around 15 percent.”

“Long-term decisions are necessary in aviation since plane purchases take time,” Demirtas told the Turkish Daily News. “They could decrease the figure as a measure against a possible economic crisis, but I believe the company already has analyzed the timing of the purchases,” he said.

“Turkey’s population and economy is growing compared to Western Europe. These purchases will bring the company to a remarkable position in global aviation,” Demirtas said.

“The market for planes has been weakening as the number of carriers diminishes,” Bloomberg quoted Douglas McNeill, an analyst at Blue Oar Securities in London, as saying. “I would think you could get reasonably good prices on orders.”

The Turkish economy is growing fast and we expect that market to grow briskly in the next 20 years, at about two to 2.5 times the average for Europe,” Randy Tinseth, Boeing Commercial Airplanes vice president of marketing, said in Paris, according to Reuters. “There is both strong tourism and good business traffic, and the Turkish market is expanding for good fundamental reasons.”

ISTANBUL – TDN with wire dispatches 15 October 2008

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