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Turkish Airlines delivers strong growth in Q3 2005
9 months ending 30 September, 2005
Dr. Temel Kotil, CEO, commenting on the results, said:
`We have delivered a strong trading performance in the year to date, which reflects a combination of good market conditions for tourism, and the positive development of Turkey’s economy and geopolitical situation. However, our results have been supported by our domestic price policy which increased turnover not only for Turkish Airlines but also for the Turkish aviation market as a whole. Looking forward, we also expect to begin to enjoy returns from our ongoing investment programme in our fleet, which will be one of Europe’s youngest by 2008.
The first nine months of 2005 saw a significant rise in revenues to $1,764 mn (2004:$1,358 mn) brought about by: increased seat capacity, up to 13,823 (+16%) and increased load factor, up to 74% (+3 pt). Revenues have been growing at 13% (CAGR) since 2001, positioning Turkish Airlines as one of the world’s fastest growing airlines.
The 50% increase in aviation fuel prices over 2005 contributed significantly to a 69% increase in fuel expenses to $393 mn, one of Turkish Airline’s largest operating costs. Total operating costs increased by 33% to $1,675 mn. Despite our non-hedging based approach, Turkish Airlines secured lower fuel costs than most other AEA airlines with costs of $1.45 (fuel cost/AASK). In addition, Turkish Airlines maintains amongst the lowest operating ($6.65: Costs/ASK) and personnel costs ($1.67: Personnel Cost/ ASK) of any AEA airline.
For the first 9 months of 2005, profits before tax rose to $154 mn from $129 mn, and net income increased to $106 mn from $81 mn over the same period in 2004.
2005 saw a strong increase in passenger numbers to 11m against 8.8m a year ago, accommodated by increased seat capacity of 13,832 (+16%) and increased load factor, up to 73,6% (+2.5%).
The number of domestic and international passengers flying to and from Turkey is expected to rise substantially over the coming years. This will be supported by increased tourism, growing domestic demand, and potential EU accession trends. From 2003 to 2004, international passenger numbers were up 21% and domestic numbers up 58%. Turkish Airlines is well positioned to capitalise on this growth, 59 new planes on order taking the fleet number to 100. Turkish Airlines plans to increase its overall seat capacity to above 18,000 by 2008. Furthermore, Turkish Airlines is planning to increase its destinations with 24 more international routes in 2006.
Turkish Airlines reported, on 16th June 2005, a Memorandum of Understanding signed with ST Aerospace in the $200mn HABOM technical maintenance centre. Through the investment in the project, maintenance capacity will increase to some 350 planes.
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Background on Turkish Airlines (‘THY’)
THY is one of the largest airlines in Europe and the market leader in Turkish air travel, now flying to over 79 destinations internationally and 28 destinations domestically.
THY had year end 2004 audited sales of US$2.1 billion and net income of US$80.1 million. THY flies to 107 destinations worldwide, of which 28 are in Turkey. It enjoys one of the younger fleets in Europe, and THY has announced plans to expand its fleet by 25% to 100 aircraft over the next three years, with a projected investment of US$2 billion. The company has the most developed technical service facility in the Middle East – CIS region, called HABOM, which is being joint ventured. Cargo accounts for some 10% of revenue. The company plans more than 30% increase in seat capacity by 2008.
In November 2004, a secondary offering increased THY’s free float of equity to 24.82% from under 2%, the balance being government owned. THY is listed on the Istanbul stock exchange (THYAO) with an approximate market value of US$1 billion.
Disclaimer: This English-language media release is provided for information purposes only; reliance should only be placed for all statutory and regulatory and other purposes on the original Turkish language version alone.
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