Turkish Airlines corporate rating; Boeing releases data on the 777x

Dino D'Amore
By Dino D'Amore March 10, 2015 21:11

Turkish Airlines corporate rating; Boeing releases data on the 777x

Moody’s and S&P have assigned Turkish Airlines’ first time public corporate rating of Ba1 and BB+, respectively.

Moody’s states that Turkish Airlines’ healthy financial profile is underpinned by its low-cost structure and historical above-peer-average profitability metrics, and that the airline has a well-diversified passenger revenue base supported by the economic and tourism growth seen in Turkey, while Istanbul’s geographic location allows the Ataturk International Airport to act as a hub for international transfer traffic.

“Our decision to assign a Ba1 CFR to Turkish Airlines balances the company’s healthy financial profile and role as the national carrier against the execution risks associated with its high-growth strategy,” says Rehan Akbar, an analyst in Moody’s corporate finance group and lead analyst for Turkish Airlines.

The Ba1 CFR on Turkish Airlines incorporates a one-notch uplift on its baseline credit assessment (BCA) of ba2, which reflects its classification by Moody’s as a government-related issuer (GRI) in view of its 49.12% ownership by the Government of Turkey (Baa3 negative).

Moody’s believes that the airline is an important contributor to the Turkish economy and plays a major role in promoting economic growth and tourism. The stable outlook of Turkish Airlines reflects Moody’s expectation that the company will see steady industry demand with favourable passenger growth and healthy load factors during its fleet expansion phase. The outlook also assumes that Turkish Airlines will continue to have an efficient cost base and above-peer-average profitability metrics through the economic cycle.

According to S&P’s, the business risk profile of Turkish Airlines reflects its market position at Istanbul Ataturk Airport, Istanbul’s beneficial geographic position as a transfer hub and the company’s strong track record of growth over the past three years.  S&P’s statement also underlined Turkish Airlines important role in the Turkish economy.  S&P considers THY’s stand-alone credit profile to be bb and has assigned a long-term corporate credit rating of BB+. S&P said that the rating reflects its view that the Turkish government has a moderately high likelihood of offering extraordinary support to THY because of the strong link between THY and the government and the airline’s important role in the Turkish economy.

S&P’s outlook is negative, however, which reflects the fact that the rating agency may lower its credit rating for THY if it downgrades Turkey.

Now that its rating is secured, THY will likely move qickly ahead with its non-EETC issuance that has been long planned for.

Meanwhile, Boeing has outlined the changes to the 777X.

Speaking at the ISTAT Americas conference in Arizona, Randy Tinseth, vice president, marketing for Boeing Commercial Airplanes, unveiled a series of product improvements that will be available on the 777-300ER, the 777-200LR and the 777 Freighter.
Tinseth said that baseline engine, airplane weight and aerodynamic improvements will be phased into production by the third quarter of 2016, lowering trip fuel use by 2%. Combine that with priced optional features and airlines will see an approximate 5% overall fuel use per seat improvement, according to Boeing.

Boeing promises engine improvements thanks to a combination of various GE 90 engine improvements by GE. Weight will be reduced due to an “optimized interior structural crown architecture, low density hydraulic fluid, lightweight insulation and tail skid removal— all resulting in a 1,200 lb. weight reduction”.

Aerodynamic improvements include adding a trailing edge device to the underside of the wing, outboard of the aileron. The profile of the device increases camber of the outboard wing, resulting in outboard wing efficiency, says Boeing. Elevator seals are also improved to reduce drag and the pitch trim software logic is revised, enabling the elevator to augment the stabilizer trim during cruise flight, reducing profile and induced drag. The slat trailing edge is made 60 percent thinner, resulting in lower drag. The inboard flap track fairing is revised to optimize span-loading and reduce profile drag. A new passenger window and seal design will result in greater flushness with the fuselage skin, reducing excrescence drag, while an enhanced tail skid protection is integrated into the fly-by-wire control laws, eliminating the need for a physical tailskid on the 777-300ER.

Boeing is also introducing options such as next-generation lightweight galleys, space-saving lavatories and straightened aft seat tracks will improve fuel efficiency even more through the addition of seats (up to 14 seats, depending on the configuration). Optional passenger experience upgrades include premium window shades, an LED lighting system to provide better quality of lighting, forward cabin noise improvements and an enhanced Door 2 entry.

The US manufacturer also stated that it was considering retrofit opportunities for in-service airplanes—and GE is considering an engine retrofit package.

The bottom line says Randy is that the “performance and economics of the 777 are unbeaten, and its range, capability and efficiency help our customers maximize their profits. We’re proud to offer an even better airplane going forward”.

Tinseth also said that Boeing is evaluating a possible new mid-market product in a niche between its narrow-body 737 and wide-body 787, saying customers had expressed interest in a jet bigger than a 757 and with 20% more range.

Dino D'Amore
By Dino D'Amore March 10, 2015 21:11