Turkish Airlines has held meetings with a number of lessors in recent days regarding its 2017 deliveries as other financing options prove difficult to arrange, FlightGlobal understands.
The carrier earlier this month issued a request for proposals for four Airbus A321neos, one A321, one A330 and three Boeing 777s.
But following July's attempted military coup, two downgrades by Moody's and the carrier's recent poor first- and second-quarter results, many banks are unwilling to take the credit risk on Turkish and ink commercial loans, FlightGlobal understands.
Therefore, Turkish is being denied one of its main forms of financing. Its other two preferred financing options – export credit agency-backed debt and Japanese operating leases with call options – are also proving hard to arrange at the present time: equity providers behind JOLCOs are wary of the airline after recent events, sources say, and both Boeing's and Airbus's ECAs are shut.
Thus, Turkish is now having to look to lessors to provide sale-and leaseback financing for its jets.
Historically, Turkish has shied away from leasing. In its 2016 second-quarter investor presentation, the airline disclosed that it had only $800 million of operational leases compared with some $9 billion of finance leases.
With their focus on asset risk rather than credit risk, lessors are more likely to be comfortable closing deals with Turkish than banks.
For example, just after the failed military coup, Intrepid Aviation persevered with a deal to lease seven Airbus A330s to Turkish.
The lessors invited to the recent meeting include, FlightGlobal understands, major players such as AerCap, which declined to comment.
AerCap's chief Aengus Kelly recently said during an earnings call: "We don't see any credit issues with that airline."
Turkish was not not immediately available for comment.
Source: Cirium Dashboard