"Fly Net Zero": airlines are on the move to reduce carbon footprint
Pegasus Airlines, Turkyie's leading low-cost airline, is increasing the number of its fuel-efficient Airbus with ten new A320/321neo model aircraft in line with its ambitious fleet renewal programme.
Aviation is fundamental to the world economy and for keeping people connected. If even more people, communities and businesses are to enjoy these benefits, the aviation sector must grow responsibly and play its part in a net-zero future. Although the aviation sector is the source of circa 2% of global emissions, a path to net zero by 2050 could be achievable.
At the 77th IATA Annual General Meeting in Boston, USA, on 4 October 2021, a resolution was passed by IATA member airlines that committed to achieving net-zero carbon emissions from their operations by 2050. This pledge brings air transport in line with the objectives of the Paris agreement to limit global warming to 1.5°C. To succeed, it will require the coordinated efforts of the entire value chain (airlines, airports, air navigation service providers, manufacturers) and significant government support.
Pegasus Hava Taşimaciliği A.Ş (Pegasus Airlines), Turkyie’s leading low-cost airline, joined the world’s leading airlines in this resolution to Fly Net Zero.
To achieve this commitment, Pegasus Airlines is working on improving relevant areas of its operations and activities in line with this goal.
Pegasus Airlines will action three levers to reach its environmental targets: fleet upgrade to latest-technology aircraft, operations optimization, and sustainable aviation fuels usage.
Within the framework of their fleet transformation strategy, to reduce their emissions, the objective is to increase the number of their fuel-efficient Airbus A320/321neo model aircraft, which offer a 15-20% reduction in fuel consumption and CO2 emissions compared to previous generation aircraft.
On 22nd December 2022, Pegasus Airlines closed its first Sustainability-Linked-Loan ('SLL') on a UK Export Finance-guaranteed aircraft-secured term loan, for the financing of ten new Airbus A321neo aircraft.
Societe Generale acted as Global Arranger, Sustainability Structurer, Facility Agent and Security Trustee for this transaction.
This highly innovative transaction is remarkable in several respects: it is the first time the sustainability-linked concept is applied to aircraft financings involving an export credit guarantee, as well as the largest aircraft-secured sustainability-linked term loan executed in the market to date and the first one to be verified by a Second Party Opinion provided by an independent ESG ratings and analytics agency.
The terms of the financing are indexed on Pegasus Airlines’ future achievements in respect of two sustainability-linked Key Performance Indicators (KPIs): carbon intensity of flights and gender diversity in management positions. Pegasus Airlines has set itself ambitious targets to reduce the carbon intensity of flights by 2030, and to increase the share of women in management by more than 50% over the same period. To reach their gender diversity objectives, the airline will leverage on and further strengthen their long-standing commitments in several industry, local and non-governmental initiatives promoting gender balance. Pegasus Airlines was the first global airline to join the United Nation’s Women’s Empowerment Principles and it also became one of the first airlines in the world to join IATA’s 25by2025 voluntary campaign for IATA member airlines to improve women representation in the industry.
Both KPIs are part of Pegasus Airlines’ Sustainability-Linked Financing Framework benefitting from a Second Party Opinion confirming its alignment with the Loan Market Association’s Sustainability-Linked Loan Principles.
By arranging this landmark aircraft financing transaction, Societe Generale supports Pegasus Airlines’ ambitious fleet renewal programme, which is central to the airline’s decarbonization journey, and strengthens further its leadership in sustainability-related initiatives for the air transport industry.
We are very happy to complete this landmark transaction for us with Societe Generale. We are also very pleased to have included SPI-link to an export credit agency supported loan at the courtesy of UK Export Finance. With this transaction, we reiterate our commitment to our long-term targets for carbon emissions and gender diversity. It was particularly important for us to address targets both on environmental efforts and on social efforts in this first-of-a-kind transaction for us. Pegasus Airlines is among the leading airlines that have adopted IATA’s commitment to achieve 2050 Net Zero Carbon Emissions. This transaction has further contributed to our commitment to Fly Net Zero by expanding our fleet of 95 aircraft - of which 75% already consists of CFM LEAP-1A powered A320neo family aircraft - with similarly environmentally friendly new generation Airbus A321neo aircraft. Furthermore, we were the first global airline to join the United Nation’s Women’s Empowerment Principles. We also became one of the first airlines in the world to join IATA’s 25by2025 voluntary campaign for IATA member airlines to improve female representation in the industry. We are proud to pioneer this innovative transaction as a milestone for our future actions to achieve our sustainability and social commitments.
Societe Generale is proud to be Pegasus Airlines’ and UK Export Finance’s partner on this landmark transaction. We are pleased to have supported Pegasus Airlines with its ambitious environmental and social development strategy, thereby contributing to the decarbonization and sustainable growth of the industry.