On the 21st of September Boeing (BA) and Turkish Airlines introduced an critical tentative arrangement for the invest in of tens of Dreamliner jets. In this posting, I want to have a brief search at the purchase and also demonstrate why this may possibly shut the doorway for several Boeing and Airbus (OTCPK:EADSF) aircraft plans.

Supply: Boeing

Boeing 787 Settlement

Desire for the Turkish curiosity in the Boeing 787 is not new, as the airline formerly had been looking to lease the Boeing 787. Other than for the simple fact that Boeing and Turkish Airlines have signed a tentative arrangement for the invest in of as several as forty Boeing 787-nine jets, there is minimal recognized about the purchase. A lot more details will most likely be extra when the deal is finalized. One particular of the items that is unknown is no matter whether an arrangement adding forty agency orders to Boeing’s backlog will be achieved at at the time. A chance is that the remaining arrangement will consist of agency orders and invest in legal rights. On top of that, no delivery schedule has been specified. What we do know is that the purchase is critical to the Dreamliner application as it extra a new client for the aircraft. The deal can be valued $ten.6B at checklist costs, but with normal savings the pricing is most likely to be nearer to $five.5B-$6B.

Airbus A350-900

With the ink of the tentative arrangement for the invest in of forty Dreamliners however moist, the information broke that Turkish Airlines is also checking out chances to invest in forty Airbus A350-900 aircraft from Boeing’s competitor Airbus. A deal of this size could be valued at around $6B as perfectly. Having a mixed fleet and the simple fact that Turkish Airlines previous year seemed into using A350s from SriLankan Airlines by using a lease, does raise the probability of Turkish Airlines inserting an purchase for Airbus’s composite aircraft.

When both of those jet makers are most likely to add orders to the purchase ebook, the curiosity in the medium wide human body jets seems to shut a ebook for the larger jets.

Boeing 777X

http://www.boeing.com/resources/boeingdotcom/commercial/customers/turkish-airlines/boeing-delivers-first-777-300er-to-turkish-airlines/assets/images/marquee.jpg

Supply: The Boeing Corporation

In 2016, Turkey was plagued by terrorist attacks and political unrest. This political unrest peaked with the coup try, but in the months after political unrest continued. This all impacted the tourism sector and subsequently the demand from customers for air travel to and from Turkey.

In May well, the airline had three Boeing 777-300ERs still left on purchase. Two of these orders, at first scheduled for 2017, had been transformed to orders for the Boeing 777 freighters, considering the fact that the cargo functions of Turkish Airlines however exhibit sturdy efficiency. The solitary Boeing 777-300ER that the airline has on purchase will be sent this year, even though the transformed orders will be sent in 2017. What we can see is that Turkish Airlines has not been notably eager to add Boeing 777s to their passenger fleet and even though the airline has demonstrated curiosity in the Boeing 777X, it now has demonstrated an even much better curiosity in smaller wide human body aircraft, which also is an sign of a issue-to-issue oriented network as a substitute of the older hub-spoke model.

The Turkish Airlines fleet is somewhat youthful, so at this issue I believe that an purchase for the Boeing 777X is off the desk.

Boeing 747-eight

http://www.boeing.com/resources/boeingdotcom/commercial/747/assets/images/marquee-747.jpg

Supply: The Boeing Corporation

In modern years, Turkish Airlines has extra than at the time been connected with Boeing’s biggest passenger jet, the Boeing 747-eight. An purchase was never placed, but in terms of ability needs could make feeling for the Ankara-Istanbul route.

When an purchase was never placed, the rumors persisted until finally CEO of Turkish Airlines denied curiosity in the Boeing 747-eight and purchased the Boeing 787 as a substitute and began negotiations for the Airbus A350.

Regardless of the rumors, I believe if anybody viewed as Turkish Airlines as a probable prospect to help save the application, you can cross it off the checklist now.

Airbus A380

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Supply: Crain’s Chicago Small business

A further jet that has been connected to Turkish Airlines in modern years is the Airbus A380. Turkish Airlines has been intrigued in the jet, but also noted that if it had been to purchase the Airbus A380 it would need 12 jets and its current infrastructure at Istanbul’s Atatürk Airport would not be adequate to provide these jets. On top of that, the airline pointed out that the current Boeing 777s are massive ample.

What is protected to say is that Turkish Airlines is extra charmed by the capabilities of the Airbus A380 than that of the Boeing 747-eight, but if there is a part for the Airbus A380 in the Turkish Airlines fleet it will be in the distant long run.

Conclusion

Over-all, the tentative arrangement for forty Boeing 787-nine jets and talks with Airbus for the invest in of the Airbus A350-900 are excellent information for investors. At the same time, 1 wants to be informed that there is no information and facts on the delivery schedule and how several of these jets will be agency and how several invest in legal rights Turkish Airlines has.

On top of that, the decision for the medium wide human body jets very substantially kills off expectations, if there however had been any, for the larger jets these kinds of as the Boeing 777X, Boeing 747-eight and Airbus A380. All of these plans either are operating out of backlog or have a higher dependency on a compact group of customers or a combination of both of those and it does not appear to be that Turkish Airlines will be extra as a client for these aircraft any time soon if ever.

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Disclosure: I am/we are extended BA.

I wrote this posting myself, and it expresses my possess opinions. I am not getting compensation for it (other than from Looking for Alpha). I have no enterprise romance with any business whose inventory is stated in this posting.

Editor’s Observe: This posting discusses 1 or extra securities that do not trade on a major U.S. trade. Please be informed of the dangers related with these stocks.

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