Advancing Turkish Airlines' Growth Endeavors

In a significant step towards expansion and sustainability, Turkish Airlines has received a new Airbus A350-900 aircraft, marking a new phase in its growth journey. This delivery is backed by an innovative financing structure that optimizes costs and achieves 100% financing solutions.

The financing structure, a combination of the JOLCO (Japanese Operating Lease with Call Option) scheme and the Balthazar insurance, was arranged by Crédit Industriel et Commercial (CIB). As the lead arranger and debt underwriter, CIB played a pivotal role in integrating the financing and equity components and underwriting the JPY denominated senior debt.

The Balthazar insurance, a product created by Airbus and Marsh, provides a credit enhancer to the senior lenders, further optimizing the overall cost of borrowing for Turkish Airlines. This insurance product has been used extensively in the last two decades and is backed by a consortium of leading insurers.

The JOLCO structure, on the other hand, leverages the appetite from Japanese investors for the aviation sector. By using this structure, Turkish Airlines is able to offer more Japanese linked solutions, a move that was reinforced by CIB's opening of a new branch in Tokyo in 2023.

Deniz Billion, Executive Director of Aviation Finance for EMEA, discussed the JOLCO structuring of this operation. CIB has extensive experience arranging JOL/ JOLCO structures for major airlines and combining them with a variety of financial products.

This transaction marks the first time that the JOLCO scheme has been combined with a Balthazar insurance supported debt for Turkish Airlines. Jean Chedeville, Global Head of Aviation at CIB, expressed pleasure in standing alongside Turkish Airlines as they embark on this new phase of expansion.

Turkish Airlines, as a prestigious client for CIB's aviation franchise, aims to double its fleet to reach 800 aircraft in the coming decade. By rejuvenating their fleet with new generation fuel-efficient aircraft like the Airbus A350-900, they aim to reduce their carbon footprint per mile flown.

CIB takes great pride in supporting Turkish Airlines on its journey of expansion. The bank is committed to supporting an airline that understands that growth and sustainability can thrive together. A mixed financing structure benefits all parties by combining stable returns, tax advantages, and risk diversification, enabling capital providers to participate flexibly with varying conditions, while borrowers or project owners gain access to diverse funding sources with potentially lower costs and improved financial stability.

This approach supports long-term investment security and aligned interests among involved parties. Turkish Airlines, as the launching customer of the Balthazar insurance guaranteed aircraft financing product back in 2019, now combines the JOLCO scheme with a Balthazar insurance supported debt, further solidifying their strategic partnership with CIB.