Turkish Airlines CFO Says Order Decision Held Up By GTF Problems

The CFO of Turkish Airlines says one of the reasons why the flag carrier has delayed making an announcement on its much anticipated 600-aircraft order is down to the engine durability issues being experienced by new-generation platforms.

Turkish Airlines has delayed the announcement of the massive order for 600 new aircraft—which the airline says would boost its operating fleet to more than 800 by 2033—by two months, but the purchase is yet to be disclosed.

“We have not made an announcement related to the [request for proposals] so far, this is a large order,” Turkish Airlines CFO Murat Seker told Aviation Daily on Aug. 10 during the carrier’s fiscal second quarter (Q2) earnings call. Seker said that beyond the question of Airbus or Boeing, the “engines [are] playing a key role [in] this decision.”

The CFO said aircraft maintenance also needed to be considered but emphasized the importance of the engine issue: “That’s why we did not make an announcement now. But soon, we will make the announcement regarding this tender.”

Pratt & Whitney announced in July that extra checks were needed on certain GTF engines that power Airbus A320neo-family aircraft. More than 1,000 PW1100G-JM engines built between late 2015 and early 2021 have been earmarked for closer inspection relating to a manufacturing issue. An analysis of the Aviation Week Network Fleet Discovery database found that 31 of Turkish’s A320neo-family aircraft could be affected by the problem.

Turkish Airlines’ plan to reveal its milestone order during this year’s IATA annual general meeting held in Istanbul in early June was delayed. A key factor then was the need for a second round of voting in Turkey’s presidential election.

The order is expected to include 400 narrowbodies—A320neos and/or Boeing 737 MAXs—and about 200 widebodies—including 787s and/or A350-900s and then 25-30 777Xs or A350-1000s. Both the A350-1000s and the 777Xs would allow Turkish Airlines to operate daily from Istanbul to Melbourne, Australia.

“Regarding our current fleet plan, we have 78 aircraft remaining on order, including A320neo, A350s and 787s, until 2028,” Seker said.

The issue of general aircraft delivery delays remains difficult, Seker said, adding that the carrier is open to extending some aircraft leases and using wet leases as needed. Turkish Airlines operates 35 leased aircraft, and if necessary, that number could increase to help the carrier hit its growth targets, the company said.

“We expect to have 460-470 aircraft in our fleet next year [and] 600 aircraft by 2028,” Seker told Aviation Daily. Turkish Airlines increased its fleet size during the second quarter by 10% to 419 aircraft, compared to the same period last year. 

Turkish has not been immune to the Pratt & Whitney GTF engines problems, which has indeed affected its operations.

“We have 56 Airbus A320neos in the fleet with GTF engines and we have 10% spare engines [for those aircraft]. Nine aircraft are grounded,” Seker said, adding that in the coming months, the carrier’s technical team will be looking further into the situation, and two or three more aircraft could be grounded as a result.

During Q2, one A350-900, four A321neos, one 787 and one 737-8 joined the Turkish Airlines fleet. As of June 30, the carrier operated 112 widebody aircraft, 283 narrowbody aircraft and 24 freighters, of which six are wet-leased.

“This year, we expect in total 56 aircraft deliveries,” Seker said, noting that 44 have already been received and that Turkish expects to operate 435 aircraft in total by year-end—an increase of 40 year over year.

Seker said the carrier is adapting itself to the “new normal” of post-COVID-19 markets and is aiming for sustainable growth. “In 2023 we had a strong start, [despite] the dramatic earthquake in Turkey, which had an impact on our company,” he added.

Turkish Airlines finished Q2 2023 with a $635 million net profit, driven by its response to strong international demand with 28% higher passenger capacity than the carrier’s 2019 level. The Star Alliance member’s total Q2 revenue grew 13.5% year-over-year to $5.1 billion. “The highest revenue ever, despite difficult headwinds,” Seker said. 

Due to decelerating global trade and the effect of the earthquake and global oversupply of cargo operations, Turkish Airlines’ cargo revenues decreased 44% year-over-year to $600 million. They are, however, still 53% higher than the 2019 level.

Turkish Airlines exceeded its 2019 international capacity figures by 29% and said it is Europe’s leading network carrier in terms of the number of daily flights operated for the last three years, according to Eurocontrol. In Q2, the airline carried more than 21 million passengers, with a domestic load factor of 81.5% and an international load factor of 81.8%. Turkish operates to 291 international destinations in 128 countries.

Narrowbody aircraft constitute 70% of its fleet, and its advantageous geographical position means Turkish can reach more than 215 international passenger destinations using narrowbodies. Roughly half of the global population is within its widebody range from Istanbul. During the first six months of 2023, average daily passenger aircraft flight utilization stood at 14 hr. 34 min. for its widebody fleet and 10 hr. 6 min. for its narrowbody aircraft.

Turkish said it is planning for a wide range of new routes globally, eyeing destinations in North and South America, Europe, Africa and the Asia-Pacific region. Looking ahead into the third quarter (Q3), Turkish remains confident. Aircraft and engine availability, however, as well as congested airspace in Europe, will remain stumbling blocks for operations.

The CFO said that until the end of 2023, there will be an imbalance in terms of supply support. “We expect to have 9% more capacity in Q3, depending on aircraft availability,” Seker added.

For the entire year, capacity will be 15-20% higher compared to the year before, excluding aircraft delays, Seker said, adding, “We are on the track to reach our target for this decade.”