Bloomberg News

Turkey’s Pegasus Air Targets Europe as Mideast Routes Delayed

September 19, 2013

Turkish discount carrier Pegasus Airlines (PGSUS) is studying options for expansion including flights to London Gatwick airport and destinations in France and Italy as it awaits traffic rights to grow in the Middle East and Africa.

Another three or four European cities could be added, with some routes possible next year and all rolled out over the next three, Chief Commercial Officer Guliz Ozturk said in an interview in London, where Pegasus currently serves only the Stansted discount hub. Other routes may get higher frequencies.

Pegasus Hava Tasimaciligi AS, as the Istanbul-based carrier is known in Turkish, flies to 44 cities outside its home nation and is seeking further routes after agreeing in December to buy 75 Airbus SAS (EAD) A320neo-series jets to phase out older Boeing Co. (BA:US) 737s. While the company is seeking European growth, the primary goal remains emerging markets, the unit of Esas Holding AS said.

“Our focus for growth is on the Middle East, Africa and the CIS,” Ozturk said, adding that it’s more difficult to obtain traffic rights in those regions than for Europe.

Pegasus stock, which began trading on the Istanbul exchange in April after an initial public offering of a 34.5 percent stake, has risen 75 percent and traded at 33.6 lira as of 10:20 a.m., valuing the airline at 3.4 billion lira ($1.8 billion).

Russia Route

Forward bookings are in line with forecasts after the company’s performance in the first six months was ahead of plan, Ozturk said. The weakness of the Turkish lira has created some challenges, particularly in terms of fuel costs paid in dollars, though that has started to moderate recently, she said.

Pegasus may add Moscow services next month with three weekly flights to Domodedovo airport if authorities sign off on new rights that became unexpectedly available, Ozturk said.

The airline is also looking for approval to add further flights to Dubai and Tel Aviv, which appeal because they yield passengers who transfer in Istanbul, the executive said. Unlike low-cost carriers such as Ryanair Holdings Plc (RYA) and EasyJet Plc (EZJ), Europe’s biggest, Pegasus encourages people to hub via its main base, with 22 percent of passengers changing plane there.

The airline operates 45 jets and will add around 10 more in the next year, Ozturk said, with some coming direct from Boeing and others sourced from leasing companies, she said. The Airbus planes, 58 A320neos and 17 larger A321neos, will be delivered from mid-decade through 2022, Pegasus has said.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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