Turkish air sell-off delayed

Privatisation grounded as investors "ask" for more time

The privatisation of the Turkish national airline has been delayed by the government, but it insists plans to sell-off the national telecom company are still on track.

Turkey's Privatisation Administration has placed newspaper advertisements telling bidders they have an extra month to lodge offers for a 51% stake in Turkish Airlines.

The Privatisation Administration said that the decision to extend the deadline from 28 February to the end of March was made before the current financial crisis.

The IMF's approval of the $7.5bn emergency loan package on the 21 December last year was conditional on deadlines set for the sale of the carrier and 33.5% of Turk Telecom.

The IMF is currently reviewing its Turkey programme and could not comment to BBC News Online on the impact of the delayed privatisation on future aid.

More time needed

"Investors interested in Turkish Airlines asked for more time to prepare the bids," said Ali Gunertekin, Project Group Head for Turkish Airlines sale at the Privatisation Administration.

Analysts in Turkey do not think the sale was delayed because of the financial crash but said it had undermined confidence and could have contributed to it.

Mr Gunertekin said the announcement was made on 20 February and was published in the press on 22 February.

Turkey's economic crisis began on 19 February when a public row erupted between the president and prime minister on tackling corruption in the banking sector.

The Turkish Lira was devalued on 22 February and the stock market crashed as foreign investors lost confidence and pulled their money out of the country.

For sale signs

The Turkish government plans to sell 51% of the airline but retain a "golden share" giving it the final say over route closures, capital increases and mergers.

SwissAir decided not to bid

The Privatisation Administration says four investor groups have shown interest in the bid but could not give further details.

Swissair, which heads the Qualitiflyer alliance of which Turkish Airlines is a member, decided not to bid at the end of January.

Air France has stated it would request tender details. Germany's Lufthansa is rumoured to have also shown some interest.

Even though the carrier losses money, it has profitable international routes, a modern fleet of aircraft, a new international airport and is an important regional hub.

The airline has been valued between $2bn and $3bn.

Phone bids

Eleven groups have shown interest in applying for Turk Telecom and seven have paid for tender documents according to the Privatisation Administration. Bids are due in 1 May but no-one has made a formal offer.

The Privatisation Administration says that there are no plans to delay the deadline.

Attempts to sell 20% of Turk Telecom last year failed to attract any bidders.