Pegasus Airlines Converts Jolco Transactions Into Sustainability-linked Loan Structure

LONDON – Pegasus Airlines announce another significant milestone in its sustainability journey. With the support of SMBC Group acting as Sustainability Coordinator and Original Lender, Pegasus has successfully converted three Japanese Operating Lease with Call Options (JOLCO) transactions into a Sustainability-Linked Loan (SLL) structure. This innovative financing incorporates environmental and social Key Performance Indicators (KPIs) across both the loan and equity components and supports the delivery of three Airbus A321neo aircraft, further strengthening Pegasus’ position as one of the world’s youngest fleets with over 100 aircraft.

To facilitate the SLL conversion in line with market best practices, Pegasus implemented its inaugural Sustainability-Linked Financing Framework (Framework), developed with support from SMBC Group as sole Sustainability Advisor in early 2025. The Framework features Key Performance Indicators (KPIs) focused on carbon intensity and gender diversity, each paired with ambitious Sustainability Performance Targets (SPTs). These KPIs and respective targets received “Strong” ratings from S&P Global’s Second-Party Opinion, which highlighted their relevance and materiality to the sustainability challenges faced by the aviation industry. The financing terms of the JOLCOs are tied to our sustainability performance against the KPIs.

“The SLL JOLCO structure reflects our commitment to reducing carbon emissions in line with Net Zero targets and advancing gender diversity within our organization. It marks an important step toward our long-term vision of sustainable growth and creating meaningful environmental and social impact.” said Barbaros Kubatoğlu, CFO of Pegasus Airlines.

“We are proud to have partnered with Pegasus Airlines on the development of its debut Sustainability-Linked Finance Framework and the SLL conversion of the JOLCOs. This landmark transaction confirms Pegasus’ commitment to sustainable growth and positive impact. At SMBC, we remain dedicated to delivering innovative financing solutions that empower our clients to achieve their sustainability goals.” said Owen Verrier-Jones, Head of Structured Finance Solutions at SMBC.

Pegasus Airlines has closed the first ever sustainability-linked aircraft-secured term loan backed by UK Export Finance in 2022, marking a major milestone in aviation finance. The facility finances ten Airbus A321neo aircraft and links loan terms to Pegasus’s future performance on carbon intensity and gender diversity. This structure sets a new benchmark for ESG innovation in export credit financing.

At Pegasus Airlines, we are driving innovation in sustainable aviation finance.

The article Pegasus Airlines converts JOLCO transactions into sustainability-linked loan structure first appeared in TravelDailyNews International.