Sabiha Gokcen International, Europe’s fastest-growing airport, will decide soon whether to sell debut bonds or borrow money to refinance debt as it expands to meet estimated passenger growth of 28 percent this year.

The Istanbul airport, owned by Malaysia Airports Holdings and Limak Yatirim of Turkey, will choose adviser banks after a previous attempt to sell 500 million euros ($681 million) of bonds was shelved last year, Chief Executive Officer Gokhan Bugday said in an interview. The company may seek to raise $500 million this time, he said.

Turkish airports had passenger growth of about 15 percent in January through May, compared with an average 5.3 percent growth rate for European airports, data from airports authority DHMI and Airports Council International Europe show. Turkey is building a third airport in Istanbul to support growth at Turkish Airlines and discount carriers such as Pegasus Hava Tasimaciligi AS as they strive to make the city a more competitive hub.

“In about one or two months our board will know clearly how we will go ahead with the plan, because we understand the markets are good for selling bonds now,” Bugday said in the interview yesterday at his office at the airport, located on the Asian side of the city of about 15 million people. The company may decide instead to initiate a loan to refinance debt, he said.

Outstanding Debt

The company borrowed 386 million euros from ABN Amro, taken over by Royal Bank of Scotland Plc, as well as Yapi & Kredi Bankasi AS and Black Sea Trade & Development Bank in 2008, and the outstanding balance is now 333.5 million euros, he said.

There may be as many as six financial advisers managing the bond sale to have broader options than in last year’s attempt, Bugday said. Unicredit, Royal Bank of Scotland and Bank of America Merrill Lynch were hired for the previous plan, a person familiar with the matter said last year.

“At the time, the market rates became too high and the global conditions weren’t good,” Bugday said.

Sabiha Gokcen expects to have 24 million passengers this year, up from 18.8 million in 2013, thanks to Turkish Airlines shifting more domestic and international flights from Ataturk, Istanbul’s other airfield, the CEO said.

Airbus A380

SGI has plans to increase capacity initially to 32 million with a 14 million-euro investment, Bugday said. The government also plans to add a second runway that will enable large aircraft including Airbus A380s to land, he said. “Then we plan to build a satellite terminal between the two runways and that will increase our capacity to 45 million passengers a year.”

Construction of the second runway will begin later this year and be completed in less than two years, Bugday said. The company will start marketing to airlines that have A380s, as TAV Havalimanlari Holding AS’s Ataturk airport can’t handle the double-decker jets, Bugday said.

Malaysia Airports increased its Sabiha Gokcen holding to 60 percent from 20 percent after buying a stake from GMR Infrastructure Ltd. for 225 million euros in a deal announced in December. TAV is controlled by Aeroports de Paris.

“Singapore Airlines are among companies that are interested in using our airport once the new runway becomes operational,” Bugday said. Aviation authorities from countries including Serbia, Jordan, Dubai and Russia are asking for more flight frequencies into Sabiha Gokcen, he added.

SGI will also benefit from a project to build a road tunnel under the Bosporus Strait to link the Asian and European sides of Istanbul, as well as the extension of metro lines and a highway from Istanbul to Izmir that will pass by the airport, Bugday said.

The addition of a third Istanbul airfield won’t hurt SGI, the CEO said. “We believe strongly that Turkish Airlines will continue using our airport increasingly even after the new airport is operational.”

To contact the reporter on this story: Ercan Ersoy in Istanbul at To contact the editors responsible for this story: Benedikt Kammel at 

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Photo Credit: Interior of Istanbul's Sabiha Gokcen Airport Terminal. Bulent Kavakkoru / Flickr