Reuters logo
UPDATE 2-Turkey's Pegasus to make landmark Airbus order -sources
December 17, 2012 / 3:20 PM / 5 years ago

UPDATE 2-Turkey's Pegasus to make landmark Airbus order -sources

* Budget carrier may order up to 100 A320-family jets

* Order could be worth $9 billion at list prices

* Expected award follows tough contest between Airbus, Boeing

* Pegasus says to unveil major aircraft purchase on Tuesday

By Tim Hepher and Evrim Ergin

PARIS/ISTANBUL, Dec 17 (Reuters) - Turkish low-cost carrier Pegasus Airlines is poised to make its first purchase of European passenger jets with an order for close to 100 Airbus A320-family aircraft, sources familiar with the matter said on Monday.

The relatively unusual decision to switch suppliers by an airline currently operating only Boeing jets follows a tough price battle between the world’s two largest planemakers.

Initial negotiations for 50 jets between Pegasus and the manufacturers were first reported by Reuters in July.

The competition is the latest milestone in what has, over the past year, become the fiercest worldwide contest for market share between Airbus and Boeing in a decade.

The airline’s final purchase could reach as many as 100 aircraft worth at least $9 billion at list prices including options, the sources said, asking not to be named.

Pegasus confirmed an imminent aircraft order as it called a news conference for Tuesday, but gave no further details.

Airbus declined to comment.

Founded in 1990, Pegasus has grown its fleet from just two aircraft to more than 40 mostly Boeing 737-800s over the past two decades and serves 52 destinations in 24 countries.

Its latest expansion highlights rapid growth in Turkish aviation after flag carrier Turkish Airlines recently ordered long-range aircraft from both Boeing and Airbus.

Istanbul-based Pegasus is looking to seize on a 15 percent improvement in fuel consumption offered by revamped models of medium-haul jets -- the Airbus A320neo and Boeing 737 MAX.

Industry watchers said the battle for the fast-growing carrier’s business had been particularly intense as Boeing resisted efforts by its European rival to secure one of its entrenched customers, a type of duel known as a “flip fight”.

Airbus is also smarting after suffering the defection of one of its own high-profile customers, SilkAir, the regional arm of Singapore Airlines, which announced a $5 billion order for Boeing 737 jets in August.

Both companies have accused the other of waging a price war.

Airlines often stick with one supplier for the same aircraft category to save on maintenance and training costs. But an abrupt improvement in fuel efficiency planned for the middle of the decade sparked a scramble for orders and allowed each supplier to woo customers previously loyal to the other side.

The step-up in technology has also produced wild swings in the fortunes of U.S. and European exports as first Airbus then Boeing sold more than 1,000 jets in 2011 and 2012 respectively.

Despite the apparent Pegasus order and a 100-plane purchase last week from AirAsia, Airbus is expected to fall well behind Boeing in the $100 billion annual jet market this year, after claiming top spot for four years in a row.

Longer term, the planemaking unit of Europe’s EADS has set its sights on a 60 percent share of the 150-seat narrow-body segment, a key market estimated at $2 trillion over 20 years.

Boeing is unwilling to surrender the largest part of the market, which is critical to the success of both planemakers, and has signalled a determination to defend a 50 percent share.

The A320 and 737 are the world’s most popular passenger planes and serve as ‘cash cows’ for larger jet developments.

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below