Exclusive: Resurgent THY talks jets with Airbus after Boeing deal

By Tim Hepher

PARIS (Reuters) - Turkish Airlines has begun talks with Airbus to buy up to 40 A350 jetliners worth $12.4 billion at list prices, hours after outlining a similar deal with rival planemaker Boeing, people familiar with the airline said on Friday.

The carrier's first significant moves on expansion since last year's failed Turkish coup appear designed to signal a rebound coinciding with President Recep Tayyip Erdogan's visit to the United Nations, though no deals have yet been finalised.

In New York, where Erdogan this week attended the U.N. General Assembly, Boeing said on Thursday Turkish Airlines (THY) intended to buy 40 of its 787-9 Dreamliner jets worth $11 billion at list prices.

Boeing and the Turkish government also announced a joint initiative to support the Turkish aerospace industry.

"During the talks to finalise the order, we are strictly evaluating the $1 billion worth business volume for the local Turkish supplier industry," Turkish Airlines Chairman Ilker Aycı said in a statement on Friday.

Hours after the Boeing announcement, attention switched behind the scenes to Boeing's arch-rival Airbus as Turkish Airlines also sought prices from the European planemaker for up to 40 wide-body A350-900 jets, the people said.

It was not immediately clear whether this might lead to a separate order or clash with the 787 talks or even be just a case of THY checking Boeing's prices against Airbus's. But THY typically maintains a balanced fleet from the rival planemakers and analysts said the diplomatic setting and wider industrial agreement suggested the Boeing deal was likely to go ahead.

That deal came as U.S. President Donald Trump praised Erdogan as a friend, despite tensions between the two countries over Turkish security officials involved in street fighting with protesters during a visit to Washington in May.

But the timing and nature of the U.S. deal were unexpected. THY had previously expressed interest in the larger 777X.

Both Boeing and Airbus declined to comment on discussions with the airline. THY was not available for comment.

THY is growing quickly to compete with Gulf carriers but diplomats say it also has a history of making political points with airplane deals as well as using new routes to project Turkey's 'soft power' abroad. In the past, it has tied abortive talks to buy the Airbus A380 to European Union accession talks, according to industry sources and cables released by Wikileaks.

Industry sources said the latest separate discussions with Boeing and Airbus appeared to have been accelerated to fit this week's diplomatic schedule, with no visible tendering process.

"There are politics involved," one industry source said.

Aircraft negotiations often take months, even years, and are usually kept under wraps until there is at least a preliminary agreement. Follow-up talks with each side may take some time.

"Turkish Airlines intends to buy 40 787-9 aircraft. However, it has not actually ordered the aircraft, so we're not sure that this is really an announcement at all," Robert Stallard, aerospace analyst at Vertical Research Partners, said in a note.

THY's passenger numbers were hit by last year's coup attempt, as well as security concerns and tensions with Russia, prompting the airline to postpone Airbus and Boeing deliveries. Passenger numbers grew 6.1 percent between January and August.

(Additional reporting by Ceyda Caglayan; Editing by Laurence Frost and Mark Potter)