Turkey's Pegasus may postpone Boeing deliveries as costs weigh, CEO says

Fri Nov 25, 2016 8:36am EST
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By Ceyda Caglayan

ISTANBUL (Reuters) - Turkish budget carrier Pegasus Airlines may postpone delivery of three new Boeing aircraft next year, lease some of its current fleet and sell older planes to cut costs after a difficult year for tourism, its chief executive said.

Pegasus (PGSUS.IS: Quote), which competes with national carrier Turkish Airlines (THYAO.IS: Quote), has increased passenger numbers more slowly than planned this year as series of bombings, a failed coup in July and tension with Russia deterred tourists. A weak lira currency has driven up fuel costs and other expenses.

"We were going to take delivery of five planes ordered from Boeing next year. Two of them will come but three of them we may take later," Mehmet Nane told Reuters in an interview late on Thursday.

Pegasus initially expected passenger growth of 13-15 percent this year, then cut that target in August to 5-7 percent. Now, Nane said: "Current developments show we will do better than our revisions." He did not elaborate.

The airline has been cutting costs by closing some less popular routes, he said. It is also leasing out two of its aircraft, complete with crew, maintenance and insurance - known in the airline industry as "wet lease".

"If our planes are empty, why not?" Nane said when asked if more lease deals were possible. Pegasus has a fleet of 77 aircraft, which is set to rise to 82 by year-end, not including next year's Boeing deliveries.

Pegasus plans to sell off older, less fuel-efficient planes as new ones arrive, Nane said. He does not expect the fleet to shrink overall.


The Boeing Company logo is projected on a wall at the "What's Next?" conference in Chicago, Illinois, U.S., October 4, 2016.    REUTERS/Jim Young