October 14, 2008 / 7:04 AM / 10 years ago

UPDATE 3-Turkey's THY to buy up to 105 Boeing, Airbus planes

* Plans to order up to 105 Boeing and Airbus planes worth

over $6 billion at list price

* Says in a strong position commercially and financially

(Adds THY CEO interview, details, updates share price)

By Paul de Bendern and Tolgahan Ozkan

ISTANBUL, Oct 14 (Reuters) - Turkish Airlines (THY) plans to order up to 105 Boeing and Airbus planes worth over $6 billion at list price as one of Europe’s fastest growing carriers seeks to strengthen its position in the region.

THY (THYAO.IS), partly owned by the Turkish state, said on Tuesday it had invited Boeing Co (BA.N) and Airbus, a unit of EADS EAD.PA, to bid for the tender of 105 aircraft, including options for 30.

“The list price of the planes we are planning to buy is more than $6 billion, but with bargaining these prices will certainly change,” THY Chief Executive Temel Kotil told Reuters.

THY said it would place a firm order for 25 wide-body, long-haul planes and 50 narrow-body, medium-haul aircraft. It would also place options for 10 wide-body and 20 narrow-body aircraft.

THY’s fleet expansion comes as the industry struggles with high energy prices, a global financial crisis and nervousness among consumers.

“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 in a statement.

Major airlines have already begun rapidly downsizing to offset their soaring fuel bills. Capacity cuts throughout the industry are also likely to cut airline costs and result in higher fares.

GROWTH PLANS

Yet the Istanbul-based carrier, along with its Middle East-based peers, sees the turmoil as creating an opportunity to expand globally as rival airlines in other regions, particularly the United States and Europe, suffer.

Kotil said THY was sticking to its sales target of $4.5 billion for 2008 and for passenger growth to rise 20 percent to 24 million passengers carried.

Boeing Commercial Airplanes Vice President for Marketing Randy Tinseth said at an aerospace market briefing in Paris: “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.”

Despite short-term pressure on air travel from a weak economy and high oil prices, Boeing sees average annual traffic growth in Europe of 4.1 percent between 2008 and 2027, including 3.5 percent for flights within the region.

The emergence of new growth markets on the outskirts of Europe is increasing the average distance of flights in the region and bolstering demand for larger aircraft, Tinseth said.

Turkish Airlines said the models in question for the tender were EADS unit Airbus’ A350 XWB, A330 and A319/320/321, and from Boeing, the 787 Dreamliner, 777 and 737-700/-800/-900.

Delivery was expected to start in the second half of 2010.

The tender is part of an ambitious 2009-2023 programme to sharply expand THY’s fleet and the number of destinations it serves. It currently has 115 aircraft.

It is also seeking to expand through acquisitions. THY submitted the higher bid for the Bosnian Muslim-Croat federation flag carrier BH Airlines, a government source said last week. (Additional reporting by Tim Hepher in Paris; Writing by Paul de Bendern; Editing by Chris Wickham and David Holmes)

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