Cablegate: Boeing Feels Pressure in the Turkish Market

This record is a partial extract of the original cable. The full text of the original cable is not available.

121222Z May 04

S E C R E T ANKARA 002680

SIPDIS

STATE FOR EUR/SE, E, EB
COMMERCE FOR MAC ASSISTANT SECRETARY WILLIAM LASH
COMMERCE FOR ITA/EUR/RD/SLETTEN/MCOSTA
COMMERCE FOR ITA/THE ADVOCACY CENTER/NEWMAN
NSC FOR MBRYZA/TMCKIBBEN
COMMERCE FOR MAC/EUR/DDEFALCO/PDASCHER
ISTANBUL FOR ECON AND FCS
AMEMBASSIES FOR ECON AND FCS

E.O. 12958: DECL: 06/01/2010
TAGS: BEXP ECON ETRD TU
SUBJECT: BOEING FEELS PRESSURE IN THE TURKISH MARKET

(U) Classified by DCM Robert Deutsch; Reasons 1.4 b and d.

1. (C) Summary: Boeing representatives continue to be
concerned over attempts by a senior official of the AKP
cabinet to pressure the company into hiring one of his
associates as Boeing's representative in Turkey. Boeing is
currently competing with EADS-Airbus for the potential sale
of 19 narrow and wide body aircraft to expand the fleet of
Turkish Airlines (THY). In addition to puchasing 19 aircraft
and extending lease options for eight B737-400 aircraft, THY
anticipates a need for 35 additional planes to meet future
demand. End Summary.

2. (C) Earlier this week, Boeing representatives met with
Embassy officials to discuss issues of concern to Boeing in
the Turkish market. Boeing is concerned over attempts by a
senior member of the AKP cabinet to pressure Boeing into
hiring one of his associates as Boeing's representative in
Turkey The state-owned Turkish flag carrier, THY, is
currently interested in purchasing nineteen planes to expand
its fleet. In addition to this fleet expansion, THY is also
looking to lengthen its lease on eight Boeing 737-400s, which
expire in 2006. THY expects a need for 35 additional planes
to meet future flight demand. This project, valued at more
than USD 2.9 billion (approximately 85 percent U.S. export
content), is one of the largest projects in Turkey in the
past several years. The German Chancellor and the French
President have raised the upcoming THY acquisitions, on
Airbus' behalf, with Prime Minister Erdogan in previous
discussions.

3. (S) According to our Boeing contacts, Rafi Harlev, an
Israeli national and former Director General of El Al,
approached Boeing in March 2004 and introduced Boeing to a
Turkish businessman named Mehmet Emin Erkan, Chairman, ERKAN
Companies Group, and an Israeli businessman named Ramiz
Aydasgil, Managing Partner, ExaGlobal Partnership. Mr. Erkan
advised Boeing that the Turkish Finance Minister was
interested in meeting with Boeing to discuss THYs
acquisition, and volunteered to arrange the meeting with the
Finance Minister. (Comment: Senior THY management reports
to the Finance Minister. End Comment).

4. (C) During Boeing's meeting with the Finance Minister,
the Minister told Boeing that Mr. Erkan understands the
airline business well and is fully aware of THYs
requirements. Immediately following the meeting with the
Finance Minister, Mr. Erkan asked Boeing to retain him as
their consultant in Turkey to ensure Boeing's success in this
market. Boeing declined Erkan's request.

5. (C) Comment: Post remains concerned about extensive
lobbying by senior EU officals and the heads of state of
Germany and France on behalf of Airbus. The Finance Minister
is scheduled to meet with Airbus in Paris later this week.
Post recommends that Washington agencies use all available
opportunities to impress their GOT interlocutors on the
importance we attach to transparency in THYs acquisition.
Post will continue its active advocacy on behalf of Boeing.
End Comment.

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