Various aviation finance houses are looking at extending debt to Turkish Airlines for 2017 deliveries so long as they can secure higher pricing on the proposed loans, a banking source tells FlightGlobal.
The airline's traditional financing options, such as Japanese operating leases with call options (JOLCOs) and commercial debt, have proved difficult to arrange as a result of political unrest and terrorism in Turkey. Poor first-half results only heightened banks' concerns about the carrier as a credit.
Those banks looking at financing 2017 deliveries for Turkish are essentially betting that political risks in the country have abated and that the carrier's poor performance will stabilise, the source suggests.
With those risks in mind, they will ask for a premium on the loans, the source adds, noting that his institution has been approached by these banks as a potential lender but that it still views the credit as too risky.
Crucially, lenders willing to take the risk may find that they are not facing stiff competition for the deal and can therefore impose favourable terms.
Lessors had appeared likely to finance much of the airline's 2017 deliveries, given their focus on asset risk as opposed to credit risk.
However, Novus Aviation Capital's managing director Hani Kuzbari said at a conference in Dubai in early October that there was a mismatch between what Turkey's airlines – including the flag carrier – and "where the market is".
Earlier this year, Turkish issued a request for proposals covering four Airbus A321neos, one A321, one A330 and three Boeing 777s set to be delivered next year.
The airline told FlightGlobal earlier this month that it was still reviewing its financing options for these aircraft.
Source: Cirium Dashboard