‍STOCKHOLM — Turkish Airlines (TK) might switch its current Boeing 737 MAX order to Airbus if negotiations with CFM fail.

An Unexpected Turn

Recently, the Turkish flag carrier announced a significant order for 75 Dreamliners and intends to purchase 150 more Boeing 737 MAX aircraft. However, on Wednesday, TK’s Chairman Prof. Ahmet Bolat said that in case negotiations with CFM fail to make progress, the airline will switch to Airbus.

CFM, owned by GE Aerospace and Safran, is the sole engine supplier for the Boeing 737 MAX; however, the Airbus A320neo offers two engine options - CFM and Pratt & Whitney (P&W), which could be decisive in this situation.

"If CFM comes to feasible economic terms, then we are going to sign with Boeing. If CFM continues its stance, we'll change to Airbus. With Airbus, I have choices," said Prof. Ahmet Bolat.

As per the Reuters report, CFM declined to disclose any details regarding ongoing negotiations, and Boeing declined to comment. However, Reuters sources still expect a positive outcome in CFM-TK negotiations and finalization of the order for 150 Boeing 737 MAX jets, given the recent political attention to the order and scarce supplies of competing Airbus jets.

In recent years, engine shortages and growing maintenance delays have caused a rise in spare parts’ prices and continuing disagreements between airlines and engine manufacturers. This also includes Turkish Airlines, which is experiencing engine shortages from P&W on its existing Airbus fleet.

Who Should Rake the Risk?

Engine manufacturers typically sell jet engines at a loss, generating revenue from servicing over 20 years. Engine manufacturers believe they should be rewarded for the risk of selling engines at a loss.

Engine manufacturers often offer long-term contracts with a fixed flight-hours rate. While the number of wear & tear has risen, such deals offer significant financial risks to manufacturers. 

CFM is not willing to grant such deals in recent years; however, it has shown greater flexibility in exchange for higher flight-hour rates. 

Turkish Airlines is seeking a long-term deal with CFM, but is unwilling to pay increased hourly rates, which may be the source of the ongoing disagreement.

While CFM is the sole engine supplier for the 737 MAX, it is competing with P&W on the Airbus A320neo family aircraft, which could enable Turkish Airlines to negotiate a better deal.

Boeing 777X on the Table

Despite recent delays, Turkish Airlines is monitoring 777X’s development and assessing the aircraft’s suitability for the airline's network.

Boeing 777X, delayed by seven years as of now, is set to be the largest twin-engine airliner. While no specific intention was expressed, 777X remains on the table for the Turkish carrier.

The airline is not in a hurry to order the 777X. "Once we have the right time, we're going to order some 777X," said Prof. Ahmet Bolat.