Bloomberg News

Turkish Air Said Hires Goldman, Citi to Sell Jet-Backed Debt

February 21, 2014

Turkish Airlines has hired Goldman Sachs Group Inc. (GS:US) and Citigroup Inc. (C:US) to sell debt backed by aircraft as it builds a fleet capable of taking on Europe’s leading carriers, three people familiar with the plan said.

The company aims to sell the enhanced equipment trust certificates this year, according to the people, who asked not to be identified as the plan is confidential. The amount of debt to be sold could approach $1 billion, one person said. Chief Executive Officer Temel Kotil said Feb. 11 that the company is working on a plan to sell EETCs, without elaborating.

EETCs allow airlines to issue investment-grade debt at lower yields and transfer the burden of financing fleet orders to the bond market. Purchases employing such instruments, which give investors a claim on planes if a carrier goes bankrupt, generally involve funding from multiple parties.

The securities will allow Turk Hava Yollari AO, as the carrier is formally known, to tap EETC investors in the U.S., two of the people said.

The Istanbul-based company aims to double its fleet to about 450 planes by 2020 after last year ordering 117 single-aisle planes from Airbus SAS and 95 from Boeing Co. (BA:US)

Turkish Air has embarked on an expansion as it builds its home airport into a long-haul transfer hub linking Europe and North America with Asia, Africa and the Middle East. The carrier will boost transit traffic to 70 percent of the international total by 2020 from about 40 percent today and should double its passenger tally to 100 million, according to Kotil.

Gulf carriers such as Emirates employing a similar model are already capturing traffic from hubs operated by carriers including Air France-KLM Group (AF) and Deutsche Lufthansa AG. (LHA)

Nevnihal Ciftci, a spokeswoman for Citigroup in Turkey, declined to comment. Ali Genc, a Turkish Airlines spokesman, wasn’t immediately available for comment, while Goldman Sachs spokesman didn’t reply to calls.

Turkish Airlines (THYAO) fell as much as 2 percent to 6.77 liras in Istanbul.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

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


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Companies Mentioned

  • GS
    (Goldman Sachs Group Inc/The)
    • $195.45 USD
    • -0.44
    • -0.23%
  • C
    (Citigroup Inc)
    • $54.43 USD
    • -0.11
    • -0.2%
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