Hong Kong 2017: Turkish Airlines confident about JOLCOs
Japanese investors have shown interest in financing Turkish Airlines’ (THY) aircraft using Japanese operating with call option (Jolco) structures, the airline’s chief financial officer has said.
Speaking at Airfinance Journal’s Airline Briefing & Networking Day in Hong Kong, Murat Seker said THY’s most recent discussion with Jolco investors was about two months ago, and THY has been talking with them since the end of last year.
“Having shown strong results in 2017, we saw that they were again interested in financing Turkish Airlines aircraft. We definitely will have an open appetite to have Jolco investments,” he says.
Seker hopes THY can finance 20% of its fleet using the Jolcos. The airline has historically been a prolific user of the tax structure, but in August 2016 Airfinance Journal reported that heightened political risk in Turkey had raised concerns among JOLCO participants and was putting pressure on equity demand for deals with THY.
Seker adds that THY has about 30% exposure to Japanese yen, and Jolco investors have expressed interest in providing financing to THY in US dollar terms.
“Going forward we think we will see Jolco investment coming back for Turkish airline deliveries,” he says.
THY has also been tapping the Chinese market for financing. In 2016, the carrier financed about $1.1 billion worth of aircraft using sale and leaseback structures in the Chinese market, Seker says, adding that THY may be open to more sale and leasebacks in future.
“Historically, because of the ambition to grow the airline, being a young airline we were a little bit inclined to doing financial leases, but looking into the future we were doing 200 deliveries over the next five years, so we will look at alternative opportunities in the market. We will be open to sale and leaseback offers, financial leases as well as double EETC issues for next year deliveries,” he says.