Chairman’s Message

Supporting its consistent growth with its total quality attitudes and unconditional customer satisfaction, our company once again continued to grow profitably in 2010.

Esteemed investors and valued business partners and employees:

In the wake of a difficult year such as 2009 was, 2010 will be remembered both as a year in which the aviation industry’s investments and business volumes increased and as a year in which competition became tougher and the pressures exerted by the industry’s costs grew stronger. Looking at overall global developments according to IATA-published figures, scheduled international passenger traffic grew by 8.2% worldwide in 2010 and the industry showed its first post-crisis profit. This is the context in which our company advanced confidently towards becoming a strong global player while its above-sector-average growth performance and strong business results as well as its marketing messages and brand investments attracted the close attention both of the sector and of national and international media.

During 2010 Turkish Airlines continued to expand its international network not just to strengthen its stature as a global carrier but also to offer its passengers a much broader range of product and service options. Last year we added eleven international and four national destinations to our flight network, thereby joining the ranks of the world’s top ten airlines in terms of number of flight destinations. Every new destination to which our flag is carried makes it possible to access even newer markets and to familiarize still more passengers with the Turkish Airlines name.

In the twelve months to end-2010, our company increased the total number of its passengers by 16% to 29.1 million, thereby successfully raising its share of the global international passenger market by about 1.25%. In the five years since 2005, Turkish Airlines more than doubled its passenger market share and became one of the world’s top eighteen airlines in terms of carried passenger numbers. We have achieved this through a confident, calculated, and step-by-step adherence to our company’s corporate organic growth program.

Last year there were significant developments in our fleet, which is one of the fundamental dynamics of our organic growth. We began to take delivery of the 89 new aircraft that we have on order, in line with which 21 new aircraft were added to our fleet, one of them a wide-body cargo plane. Thanks to these additions, we achieved about an 18% rise in our total seat capacity in 2010. Our new aircraft have also further enhanced the dynamism of our portfolio while securing our stature as the European airline with the youngest fleet, the average age of which is about 6.5 years.

Thanks to our effective sales and marketing activities in 2010 the growth in our passenger numbers was faster than the increase in our capacity, which raised our seat occupancy rate by 2.7 points year-on to 73.7%. At the same time, the returns on our investments in cargo transport have been coming in much faster than even expected. In our cargo operations business line, we achieved a 36% rate of year-on growth while raising our cargo carrying capacity utilization rate by 6.3 points to about the 72% level.

Supporting its consistent growth with its total quality attitudes and commitment to unconditional customer satisfaction, our company once again was the recipient of Skytrax’s “Best Airline Southern Europe” award in 2010. Having also been named the winner of Skytrax’s “World's Best Economy Class Airline Onboard Catering” award last year as well, Turkish Airlines continues to undertake investments to raise the standards of its passenger service even higher without any loss in momentum. Just one example of Turkish Airlines’ attention to passenger comfort and its of its commitment to maximizing it is the company’s decision to have above-average seat pitch in cabins other than Business Class in the new aircraft which it has ordered. At the same time, we have developed a new product in the form of a “Comfort Class” which is positioned between Business and Economy on our newly-ordered 777-300 ER aircraft. Turkish Airlines Comfort Class is designed to offer economy-class passengers who wish to have a more quality flight experience to move up to comfort class against payment of an extra charge.

Turning now to brand investments, 2010 was a year in which Turkish Airlines was the author of a number of important successes. Our sponsorship agreements with such premier football teams as FC Barcelona and Manchester United attracted worldwide attention. Through our collaborations with Turkish and foreign sport clubs and athletes we contributed towards our own brand value while also supporting sports. Through the association of such sport celebrities as Caroline Wozniacki and Kobe Bryant with the Turkish Airlines brand, we have further enhanced its international prestige by increasing its visibility.

With competition becoming increasingly tougher in today’s aviation industry, financial discipline has emerged as one of the most crucial keys to achieving sustainable growth. Fully aware of this fact, Turkish Airlines continues to carry out its long-term, value-based growth program by shaping it around the principle of effective cost management. Aviation Week, a leading aerospace industry weekly magazine, identified Turkish Airlines as the world’s best airline in terms of financial health in 2010.

With global financial markets now in the midst of their recovery, 2010 was a year during which fuel prices began to rise once again as consumption resumed and demand mounted for oil as one of the most important raw materials of production. Last year’s more costly aviation fuel had a direct impact on the company’s profitability. In fiscal year 2010, Turkish Airlines booked TRL 8.4 billion in sales as well as a TRL 482.2 million operating profit and a net profit amounting to TRL 286.4 million. Last year the company continued to create value for all of its stakeholders by remaining profitable even while carrying out an ambitious investment program and enduring heightened cost pressures.

I take this opportunity to extend my sincere thanks to all of our managers, employees, business partners, customers, and suppliers for their efforts and valuable contributions towards the successes Turkish Airlines achieved last year as well as to you, our esteemed shareholders, for your continued support.
In closing, I offer my respects and best wishes that 2011 will be a successful year for our country as well as for our company.