Türkiye's national carrier Turkish Airlines (THY) is set to sign an agreement with Airbus and Rolls-Royce Holdings for the domestic production of aircraft components, which is valued at as much as $20 billion, according to a Bloomberg News report on Wednesday.
Turkish Airlines is set to sign an agreement with Rolls-Royce Holdings Plc and Airbus SE for the local production of aircraft components valued at as much as $20 billion, part of its massive plane purchase announced last year.
A deal could be announced at a ceremony in Istanbul later this month, according to Turkish officials with knowledge of the matter. Türkiye Wealth Fund (TWF) is the largest shareholder of Turkish Airlines.
The carrier confirmed the purchase of 220 aircraft from Airbus in December, with options for more as the airline looks to scale up its Istanbul hub and it had already publicly acknowledged aims to almost double its fleet to more than 800 planes by 2033. As part of the order, Türkiye pushed for local production of airplane parts, the people said.
The agreement for domestic production of airplane parts is a significant component of the country's goal to develop its civilian and military aviation industry and is part of the 2023 Airbus order that’s valued at about $70 billion, according to Bloomberg.
In a statement to the Public Disclosure Platform (KAP) last December the company announced that it would buy 150 narrow-body A321 Neo aircraft in addition to 50 wide-body A350-900 jets, 15 of the A350-1000 planes and five A350F cargo aircraft. Turkish Airlines CEO, Bilal Ekşi, said in a social media statement that the entire order could potentially add up to 355 aircraft.
At the same time, it was reported that Rolls-Royce would be the engine supplier for 70 widebody aircraft ordered as part of the deal.
Turkish companies including state-run TUSAŞ Engine Industries Inc. (TEI) are likely to be part of the manufacturing program the officials who asked not to be identified as the discussions are confidential, said.
A Turkish Airlines spokesperson is said to have confirmed the date for a signing ceremony, without elaborating. An Airbus spokesperson declined to comment. Rolls-Royce couldn’t immediately be reached for comment.
Shares of Airbus and Rolls-Royce climbed as much as 1.6% and 2.8%, respectively, after the news, before trading 1.2% and 2.1% higher as of 12:53 p.m. in London.
Türkiye has long been engaged in talks with foreign companies including Rolls-Royce to acquire engine technology for its domestic tank and warplane projects. The jet engine maker, whose CEO holds Turkish and British citizenship, already has a joint venture with industrial conglomerate Kale Group in Türkiye.
The president of Airbus Türkiye, Simon Ward in an interview with Anadolu Agency (AA) earlier in March hailed the decadeslong partnership between the aviation giant and Türkiye and said the THY order of 220 aircraft "was one of the largest orders we received globally, and it had a very positive impact on our order book in 2023."
The government in Ankara has been pushing to make domestic production a part of its foreign purchases, including defense equipment and passenger airplanes. At the same time, it has invested significantly in air transportation projects such as the vast new Istanbul Airport which opened back in 2018 and the expansion of Sabiha Gökçen International Airport whose second runway became operational last year.
Istanbul Airport, a primary hub of Turkish Airlines also maintained the title of busiest airport in Europe last year with an average of 1,375 flights per day, according to a report by the European Organization for the Safety of Air Navigation (Eurocontrol).