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Boeing wins $36 billion deal from Turkey, trumping Airbus
Dec. 19, 2024 at 1:37 pm
A Boeing 737 Max 10 at the Farnborough International Airshow in the United Kingdom last summer. (Jason Alden / Bloomberg)
A Boeing 737 MAX 10 aircraft during a flight demonstration at the Paris Air Show in 2023. (Bloomberg)
By
Julie Johnsson
and
Siddharth Philip
Bloomberg
Boeing won an order valued at $36 billion from Pegasus Airlines, in its biggest commitment so far this year that deals a blow to rival Airbus, previously the preferred choice for the Turkish low-cost airline.
The carrier placed firm orders for 100 of the as-yet uncertified 737 MAX 10 model that it will begin receiving in 2028, with options for another 100, it said in a stock exchange filing. The total value of the agreement assumes that all options are converted, and is based on list prices rather than the market values typically negotiated by customers.
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The largest order in Pegasus’s history is an important win for Boeing as it works to overcome the fallout from a prolonged strike and a near-catastrophic accident at the start of the year. It also marks a strategic reversal for Pegasus after the carrier said less than two years ago that it wanted to become an all-Airbus operator.
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Boeing’s shares rose as much as 4% as of 2:33 p.m. in New York, reaching the highest intraday price in four months. The planemaker is working to end an otherwise dismal year on a high note, having sold 14 of its 777X jets to China Airlines earlier on Thursday. The Taiwanese flag carrier also ordered 10 A350-1000 jets from Airbus SE.
More than four months into Kelly Ortberg’s term as Boeing’s chief executive officer, “customers are also starting to feel more confident,” said Jefferies analyst Sheila Kahyaoglu. The company is poised for a “a fresh start into 2025” with its factories now back to full production after a lengthy strike, she said in an interview.
The stock has risen nearly 30% since mid-November as the planemaker surpassed two key milestones: ending a 53-day strike that shut down most of its airplane manufacturing and raising $24 billion to shore up its liquidity.
The long-delayed 737 Max 10 is the largest variant of Boeing’s popular single-aisle family, and carriers including United Airline Holdings Inc and Virgin Australia have switched out some of their orders for the model due to uncertainty about when it will be certified. Bloomberg News reported this month that Qatar Airways was looking to strike orders for the model off its books.
Pegasus said the “general anticipation” is for the Max 10 to be certified in the second half of 2025. The US planemaker’s final 737 Max models are running years behind schedule as they face tougher regulatory scrutiny, including a requirement to redesign of the jet engines anti-ice system.
Jefferies doesn’t expect the stretched 737 to begin commercial service until 2026. And that’s presuming the certification doesn’t get hung up on fresh turmoil in Washington DC, Kahyaoglu said, with a potential government shutdown looming and the head of the US Federal Aviation Administration set to step down when President-elect Donald Trump takes office in January.
Pegasus said in 2023 that it was working on a fresh aircraft order to expand and go further afield into destinations in North Africa and the Baltic states. The carrier has a fleet of more than 100 planes, including 16 older 737 NGs and the rest made up of Airbus A320 family jets, according to its website.
The airline also has outstanding orders for another 53 A321 jets, according to Airbus’s tally. So far this year, Boeing has received 427 gross orders, and the company has a backlog for the Max 10 variant of 1,109 units.
“Pegasus continues to work with both Boeing and Airbus,” the company said via email. “This order strengthens the collaboration with Boeing, but the relationship with Airbus remains intact. The aircraft deliveries with Airbus will continue until the end of 2029.”
Turkey has ambitions to turn itself into a bigger tourism and business hub, using its new Istanbul airport as a global airfield that can rival those in the Middle East, including Dubai and Doha in Qatar. Pegasus operates from Sabiha Gokcen airport, Istanbul’s second hub, which recently opened a second runway.
The deal also stands to deepen corporate and political ties between the two countries. Pegasus said the order will “open new doors and create production and export opportunities both for Turkish manufacturers and for the wider aviation industry,” implying that local companies and industries stand to share in some of the value chain.
Airbus has also gained an important foothold in Turkey, winning an order for 220 aircraft a year ago from flag carrier Turkish Airlines that consisted of 150 A321 narrow-body jets and 70 of the A350 widebody.
–With assistance from Leen Al-Rashdan.
(Updates shares, adds analyst, airline comment from the fourth paragraph.)
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