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Turkish Airlines Plans To Order Up To 105 Planes

09 Jun 2009 13:36 GTBDT =DJ INTERVIEW: BY K.P. Lee

KUALA LUMPUR (Dow Jones)--Although many airlines are cutting routes and grounding planes amid a slump in global air travel, Turkish Airlines (THYAO.IS), or THY, plans to go ahead with the purchase of up to 70 narrowbody and 35 widebody aircraft to boost capacity and add destinations.

President and Chief Executive Temel Kotil told Dow Jones Newswires in an interview that the state-owned airline plans to make the major plane order "within the next few months."

He said THY is in talks with manufacturers Airbus and Boeing Co. (BA) about the order and the process is continuing, but he declined to elaborate further.

Kotil, however, dismissed market speculation that the order will be announced during this months Paris Air Show, saying that "it will not be so soon."

The airline already has five widebody Boeing 777-300ERs and four shorter-range Airbus 321s on order, he said. This is in addition to the 4 Boeing widebodies leased last year and early this year from Indias Jet Airways (532617.BY) to support the airlines growth plans. The airlines fleet size at the end of 2008 was 127 aircraft.

For the acquisitions, Kotil said the airline, with a cash pile of $1.2 billion, would have "no problems" securing financing from banks.
He said that THY is still on the lookout for more planes to lease before its new equipment arrives. He said the airline could consider leasing "suitable planes" from Jet Airways or other airlines if they were available.

"If theres an opportunity and the rate is low, of course (we would be interested)... we are growing," he said.

While many other carriers are downsizing to survive, THY expects to carry 26.7 million passengers in 2009, up 19% from 22.5 million last year and plans to add 12 new destinations to make 154 by the end of this year. "We are targeting about 10 new destinations every year," Kotil said, explaining that such aggressive growth is crucial to bring enhanced connectivity to the hub it is building at its Istanbul home base.

The airline has this year started flights to destinations as far apart as Sao Paulo in Brazil and Nairobi in Kenya, and is hoping to add Toronto and Jakarta, among others, he said.

Kotil said he wants to grow the number of passengers transiting through Istanbul on the airline - estimated at 2 million in 2009, some 30% higher than a year earlier - to 10 million within 5 years. "In order to do this we need higher frequencies and a larger network," he said.

The hubs location - within 5 flying hours of 40% of the global airline market of Europe, the Middle East and parts of Africa - makes it an ideal staging post, he said. "This is our natural feeder market."

Kotil said the strategy is already paying dividends. The company posted a net profit last year of 1.1 billion Turkish lira, almost four times the 292 million lira earned a year earlier. During the first quarter, THY reported a net profit of 155 million lira but the second quarter will likely be better, he said.

Still, Kotil admitted yields have deteriorated a little this year but the airline is trying to keep costs under control. "Our cost structure is now close to (low cost carrier) Easyjet... thats how we remain profitable," he said. 

-By K.P. Lee ; Dow Jones Newswires; (603) 2026 1233;
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