Haluk Bayraktar: “We concentrate on being the best in technology over profits”
The Bayraktar KIZILELMA Unmanned Fighter Jet is the most important project on which Baykar, the world’s largest UCAV exporter, is currently working. Baykar CEO Haluk Bayraktar says that the company allocated $1 billion to the project.
The Bayraktar KIZILELMA unmanned fighter is the most important project on which Baykar, the world’s largest UCAV exporter, is current working. Baykar CEO Haluk Bayraktar says they allocated $1 billion to the project. Stressing that the company will begin the serial production of Bayraktar KIZILELMA next year, Bayraktar says that Türkiye will be building the world’s most advanced unmanned fighter within the next four years by developing its own engine: “We concentrate on being the best in technology over profits.”
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Currently the world’s largest armed unmanned aerial vehicle (UCAV) exporter, Baykar exports its Bayraktar TB2 and Bayraktar AKINCI drones to 34 countries. The company, whose export volume reached $1.770 billion in 2023, accounts for 32 percent of the Turkish defense and aerospace industry’s total exports. Meanwhile, it generates 90 percent of its revenue through export deals. Recalling that Baykar’s gross revenue amounted to $2 billion last year, Baykar CEO Haluk Bayraktar notes that the company seeks to expand into new regions like Latin America as well as European Union and NATO countries.
The most significant project on which Baykar is currently working is the Bayraktar KIZILELMA unmanned fighter jet. Stating that the company allocated $1 billion to developing Bayraktar KIZILELMA, Haluk Bayraktar adds: “Last year, Baykar decided to invest in engines. We will invest $300 million into engine production within the next five years. Within four years, we will be building Bayraktar KIZILELMA’s engine.”
Noting that the company plans to make a total investment of no less than $1.5 billion within the next five years, Bayraktar says: “We will start the serial production of the Bayraktar TB3 this year. Our goal is to build at least twelve Bayraktar KIZILELMAs in 2024. This business tends to grow exponentially. In four years’ time, our country will be making the world’s most advanced unmanned fighter jet. We concentrate on being the best in technology, not making money.”
Baykar CEO Haluk Bayraktar offered the following answers to Capital’s questions:
How did Baykar become the world’s largest UCAV exporter in quantitative terms?
We are the world’s largest in terms of the countries to which we export. We are currently exporting UCAVs to 34 countries. We export Bayraktar TB2s to 33 countries and Bayraktar AKINCI to nine countries. The entire industry has gained momentum alongside us. The industry’s gross revenue was just $1 billion in 2002. It soared to $12 billion by 2023. The Middle East, Europe, Africa and Central Asia are our biggest markets by volume. Baykar has been the industry’s export leader by a long shot for the last three years.
Where did your 2023 exports reach?
We account for 32 percent of the Turkish defense and aerospace industry’s exports with $1.770 billion, whereas our closest competitor recorded $860 million. A single product, Bayraktar TB2, largely accounted for that number by itself. A small part of it was the revenue we generated from AKINCI. Baykar has been the export leader with three products for the last three years and it singlehandedly accounts for almost one third of the entire industry’s exports. Building a reliable, high-performance and autonomous product is the key point here. At the same time, there is an indicator called “life cycle cost” in our business. It refers to all the costs that are associated with a product throughout its life cycle. Baykar’s UCAVs are quite effective in terms of their life cycle costs. Our product has already proven itself in operational theaters and in vital situations such as the preservation of the independence of nations.
You mentioned that the defense industry has been gaining momentum. Generally speaking, how are Turkish defense companies doing globally?
In 2022, four Turkish companies ranked among the world’s top 100 defense companies: Aselsan, Baykar, TUSAŞ and Roketsan. That year, the total gross revenue of Turkish defense companies caused a 20-percent increase in the gross revenue of the top 100 companies compared to the previous year. Meanwhile, Baykar led the world’s 100 largest defense companies in terms of gross revenue increase with 94.5 percent.
What was your gross revenue in 2023?
We recorded approximately $1.8 billion in exports and a total gross revenue of $2 billion. Compared to 2022, our gross revenue increased by 8 percent. Our exports account for more than 90 percent of our gross revenue.
How is 2024 going?
Right now, more than 90 percent of our outstanding orders come from exports. We have been seeing demand from new regions. There is interest from the Pacific nations and Latin America. There will be new openings in terms of markets. We especially want to have a stronger presence in NATO countries. South America is also on our radar.
To how many NATO countries are you exporting?
We have sold UCAVs to five NATO countries. In May 2021, we signed a $300 million contract with Poland, which is a member of both NATO and the European Union. We delivered 24 UCAVs, consisting of four systems, to them. Each system features six aircraft.
Romania and Lithuania, to which we exported as part of a donation campaign for Ukraine, are also NATO and EU members. Other member states, which we serve, are Albania and Türkiye.
In terms of expansion, we consider NATO and EU countries our priority. Looking at other regions, Baykar made its largest single export to Saudi Arabia in August 2022. We received an order exceeding $3 billion. That number went down in history as the biggest defense and aerospace export in the Republican period.
Have you received any subsidies or grants from the government?
Neither Baykar nor its partners have received a single cent in cash grants from the government since the company’s establishment. We have not even taken out any bank loans. We finance 100 percent of all our projects with our own resources. We continue to grow by investing our export revenue into our projects. As the Defense Industry Agency has already announced, payments to Baykar account for less than one percent of Türkiye’s defense and security expenditure. By contrast, 70 percent of Türkiye’s defense spending goes to state-owned enterprises. Baykar has never taken advantage of cash incentives for its investments. Baykar has not requested or been offered any cash incentives such as interest or profit share support for investment loans or any kind of qualified personnel, energy, or grant support. Moreover, the investment site allocation and social security premium support offered in the relevant official decision have not been utilized by Baykar to date.
The 600 million TL incentive, which has been misconstrued as a cash injection by the state into Baykar, was essentially a tax cut offered to all companies, including foreign business, investing in certain areas. Last year alone, we paid 6.4 billion TL in taxes. We invested much more to date than 600 million TL. We are currently employing 4500 people and the vast majority of them are young engineers. We are one of the world’s select high-tech companies.
You recently joined a list of Türkiye’s wealthiest business people. How did that happen?
In 2023, we made a direct contribution of 12.2 billion TL in the form of tax payments and donations. We were also one of Türkiye’s top corporate taxpayers with 6.4 billion TL. Moreover, the company’s shareholders, Selçuk Bayraktar and Haluk Bayraktar, were the country’s top taxpayers in 2021 and 2022. In 2023, we paid 800 million TL in taxes for 2022. In other words, we have been the top taxpayers by a long shot for the last three years. Selçuk Bey ranks first and I rank second.
What’s the latest about the unmanned fighter jet KIZILELMA, which you consider your most important project?
It remains under development. We are talking about an entirely new field – for the entire world, not just ourselves. [KIZILELMA] will be our country’s first unmanned fighter jet. We have reached the serial production stage in the Bayraktar KIZILELMA unmanned fighter jet project.
What is your production capacity? How many UCAVs are you able to build annually?
Right now, we are building 250 Bayraktar TB2s per year. That number was just 10 when we began production. We are also building 50 Bayraktar AKINCI UCAVs annually up from 12 last year. We are constantly investing to expand our production capacity. Baykar spends 15 percent of its revenue on R&D.
Bayraktar TB2 was named one of ten world-changing technologies by the MIT Technology Review. We are the first company to start the serial production of a UCAV of this scale. The article stated that the “cost-effective drones, which could be produced en masse, changed the way smaller nations fight.”
R&D bears critical importance for the defense industry. What are you working on right now?
We allocated $250 million for R&D in 2023. As I already mentioned, the number of our employees has already reached 4500. We have been expanding our staff by 50 percent annually. Half of our 4500 employees are engineers. We also have close to 2500 technicians. To compete with the world, we need to invest and develop new products and technology constantly. Right now, we are most heavily investing in artificial intelligence. We are developing platforms capable of landing on aircraft carriers. Bayraktar KIZILELMA is such a project. We set out to build the world’s most advanced unmanned fighter jet and we are currently succeeding. We are building the third prototype. We flew KIZILELMA over millions of people at TEKNOFEST on the Republic’s centennial to show it to everyone. KIZILELMA led the way, accompanied by five manned fighter jets the Turkish Stars and finally Solo Türk. In truth, that picture offered a glimpse into the industry’s future where manned and unmanned systems will conduct missions together.
Would it be possible to build an indigenous engine for the unmanned fighter jet?
When we started working in the defense industry, we concentrated on the most crucial parts: flight control systems, software and electronics. We imported the Bayraktar TB2’s engine. Indeed, the Bayraktar TB2’s engine accounted for less than 1 percent of the product’s added value. That is why we did not attach too much importance to the engine. However, we have now developed the BM100 engine for the Bayraktar TB2 with our own resources. Our goal is to produce 20 of them this year and we plan to start serial production thereafter. The Bayraktar TB2 logs 250,000 flight hours annually which means that we need 200 spare engines every single year. More broadly, the localization rate across the defense industry has been on the rise. For example, TEI build the Bayraktar TB3’s engine. Indeed, the Bayraktar TB3 has never operated with a foreign engine. Bayraktar AKINCI and Bayraktar KIZILELMA, in turn, use turbine engines. As Baykar, we resolved to invest in this field last year. Right now, we are preparing to make a very significant investment. Over the next five years, Baykar will invest $300 million to build our aircrafts’ engines.
When will Bayraktar KIZILELMA have an indigenous engine?
Bayraktar KIZILELMA will have an indigenous engine within four years. Generally speaking, we allocated $1 billion to developing the Bayraktar KIZILELMA project. You simply need to invest if you intend to compete with the world. During a recent visit to New York, I had the opportunity to meet Elon Musk. I told him that I could not buy a TOGG because the queue was too long, so I purchased a Tesla instead – which I could get right away. Musk praised Turkish companies and mentioned that companies in Türkiye were building many Tesla parts.
Do you have any plans to delve into new technologies and businesses like autonomous vehicles?
There is just one thing that Baykar makes: unmanned aerial vehicles. Building aircraft is our only business. We are focused on becoming the world’s largest company in this field. We believe in the importance of concentrating on a single product and a single technology. We would invest in any area, which requires an investment, within the UAV ecosystem.
That is why we are investing in engines, camera technologies and communication technologies. We have a separate company regarding artificial intelligence. Baykar owns several other companies working on different technological fields. Those are all business launched to support the UAV ecosystem. Finally, we have a construction company that was established just to build Baykar’s investments. Did you know that the average Baykar employee is 29 years old? 4500 people, whose median age is 29, are building an unmanned fighter jet.
How much do you expect to have invested in five years’ time?
We will invest no less than $1.5 billion within the next five years.
How about your gross revenue targets?
Baykar never sets a target in terms of how much revenue it will generate. We are focused on being the best in technology, not making money. Sales come naturally. Our goal is to complete the Bayraktar KIZILELMA. We aim to start the serial production of KIZILELMA next year. We will start the serial production of Bayraktar TB3 this year. At the same time, we have a space venture, Fergani, that Selçuk Bey founded. Going forward, we will strive to dominate space as well.
Do you have quantitative targets for serial production in 2025 and 2026?
We aim to build no less than twelve Bayraktar KIZILELMA's in 2024. We will multiply that number in 2025. By 2026, we will probably have reached 48. That operation shall grow exponentially.
We will build 20 Bayraktar TB3s this year. We will increase that number to at least 50 in 2025. When it comes to the Bayraktar AKINCI, the engine is critically important because it has a turbine engine. We need to invest in that area and develop necessary capabilities. I claim that Türkiye will be building engines within the next four years. Our country has already build the engines of Bayraktar TB2 and Bayraktar TB3. AKINCI’s engine will be built in Türkiye within two years and KIZILELMA’s engine will be built in four years. Consequently, our country will be making the world’s most advanced unmanned aerial fighter jet. We lead the world in UCAVs. We have a single goal and we are heading toward it. We do it with our thousands of engineers and technicians.
Source: Capital