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Asset firm answers the Borajet distress call

Posted 31 May 2017 · Add Comment

The ownership of Turkish regional carrier, Borajet, has changed hands, with the new owners planning to cut costs and improve service standards. Alan Dron reports.

Turkish regional carrier, Borajet Airlines, plans to expand its international route map following its acquisition by an Istanbul-based investment group.
SBK Holding specialises in ‘distress asset management’, taking on companies that have encountered financial difficulties and turning them around. It has investments in several sectors including energy, pharmaceuticals and tourism.
Borajet is its first venture into commercial aviation, although it is keen to expand in the sector.
It acquired Borajet for $258 million in January, after it bought the shareholding of the airline’s founder, Dr Yalcin Ayasli.
SBK Holding vice-chairman, Umut Suna Uygun, said Ayasli had been linked – wrongly – to last July’s attempted coup in Turkey. “He’s a kind and honourable man,” she said, but he had, nevertheless, taken the decision to leave Turkey for the US.
Uygun is now Borajet’s general manager.
Like most Turkish airlines, Borajet has been affected by the downturn in the country’s economy, with the sharp drop in tourism, due to terrorist incidents, hitting the aviation sector.
The country’s two largest carriers, Turkish Airlines and Pegasus Airlines, have recorded financial losses for the past year as a result, although Pegasus is confident that it will return to profit in the current financial year.
Uygun said that the airline’s financial position had attracted SBK’s attention: “We love a challenge. We are very successful in turnaround stories.”
Buying the airline had initially been an opportunistic move, as the aviation sector had not featured in SBK’s strategic plan. However, following its entry into the aviation marketplace, it is now looking for further aviation assets, she said.
SBK appreciated that Borajet was a small operation, but added: “We are a young and ambitious organisation and willing to increase our assets in this industry.”
The first objective is to restructure the airline, said Uygun. There were some minor management issues, but the main initial focus will be to reduce costs: “We plan to implement a new cost control system because it’s not working properly at the moment. We empower each employee about this. A cost control system starts from the bottom.”
Borajet was founded in 2008 and began operations in 2010 with three second-hand ATR 72-500 turboprops. Based at Sabiha Gökçen International Airport, Istanbul’s secondary hub, the airline currently has a fleet of 12 Embraer E-190LR and E-195LR regional jets, which it employs on an extensive network of domestic destinations, as well as to Iran, Iraq and Europe – especially Germany. Its domestic route map includes smaller cities and routes not normally served by other carriers.
It also operates several business jets on charter services, including a Bombardier Global Express XRS for long-range executive flights.
In October 2016, Borajet announced a deal with Brazilian aircraft manufacturer, Embraer, and Ireland-based lessor, AerCap, for three E190 E2s and two E195 E2s – the first leasing contract for the new-generation Embraer regional jets. The new aircraft are due to arrive from Q1 2018.
Uygun said her aim was to keep the existing Embraers and use the new aircraft for expansion: “We are a significant buyer of the E2. We believe in the future of this aircraft. It will make a big difference for us.”
Five of the existing Embraer E190LRs are used on wet-lease services for Turkish Airlines and it is possible that links with the national flag-carrier may increase.
With three major carriers in Turkey, Turkish Airlines, Pegasus and AtlasJet, Borajet has to create a distinct position and differentiate itself from the competition, Uygun added. She was aiming to position Borajet as a niche, boutique carrier.
With this in mind, SBK also aimed to improve the passenger experience at Borajet and to add new sales channels. She declined to go into details, but said that she planned to upgrade passenger services to attract travellers.
 

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