Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Turkish Airlines has ordered more than 200 Airbus aircraft as part of a “milestone” agreement worth tens of billions of dollars to boost Istanbul’s role as an international hub and bolster Turkey’s already vast tourism industry.
Turkey’s flag carrier said it had placed orders for 220 planes, including 70 long-distance wide-body A350 jets and 150 single-aisle A321neo aircraft. Turkish Airlines also obtained rights to buy an additional 125 Airbus aeroplanes.
The agreement, which has been under discussion for weeks, underscores the strong rebound in international air travel. Demand for the industry’s biggest jets has soared after a prolonged downturn during the Covid-19 pandemic that severely dented long-haul travel.
Order backlogs for both Airbus and its US rival Boeing are at record highs as airlines globally have rushed to place orders this year and secure increasingly scarce delivery slots.
“This investment is a crucial milestone in the further evolution of Turkey’s aviation industry,” said Turkish Airlines chair Ahmet Bolat, who added that it would contribute to the country’s “prominence as an aviation hub” and “have a considerable positive impact on Turkey’s tourism sector”.
The deal is a further fillip for Britain’s Rolls-Royce, whose Trent XWB engines power the A350 jets used for long-haul travel. The purchase commitments mean 2023 will be the best year for Rolls-Royce in terms of new orders for 15 years.
The FTSE 100 company is in the middle of a sweeping restructuring under chief executive Tufan Erginbilgiç who took the helm at the start of this year.
The deal, which was welcomed by British prime minister Rishi Sunak, will make Turkish Airlines the largest Trent XWB operator in the world. Erginbilgiç said the pact was “proof that the actions we are taking to transform Rolls-Royce into a high performing and competitive company underpinned by profitable growth are working”.
The purchases come at a time when Turkey is seeking to attract inflows of foreign currency to narrow a yawning current account deficit. Tourism is a crucial source of hard currency, with the country having generated around $42bn in tourism revenue in the first nine months of this year, according to official statistics.
Turkey is also keen to build its sprawling $11bn Istanbul Airport — one of President Recep Tayyip Erdoğan’s hallmark projects and Turkish Airlines’s home base — into a major aviation hub. Istanbul Airport, which opened in 2018, already ranks among the world’s busiest airports, with traffic of 64.3mn passengers last year exceeding London Heathrow, Airports Council International data show.
Turkish Airlines, which is 49 per cent owned by the country’s sovereign wealth fund, is among the country’s crown jewels. It is seeking to grow significantly over the next decade, with plans to add 54 new routes — including 22 to Europe, 13 to the Far East & Asia and nine to the Americas. The group is also expanding the international reach of its low-cost carrier Anadolu Jet.
Turkish Airlines earned $2.8bn in net profits in the first nine months of 2023, up by nearly a quarter from the same period last year. Its Istanbul-listed shares have risen 16 per cent this year in US dollar terms, ahead of the broader stock market, according to FactSet data.
