The Turkish national airline flies back to pre-crisis levels.
(Photo: IMAGO/Scanpix)
Istanbul The partly state-owned Turkish airline Turkish Airlines has significantly expanded its flight operations and, despite economic turbulence in Turkey, is earning more money than before. In the second quarter, net profit rose to 576 million US dollars, the company announced in Istanbul on Thursday. In the first half of the year, the surplus was 737 million dollars.
Compared to its competitor and Star Alliance partner Lufthansa, Turkish Airlines is extremely profitable. With the exception of the Swiss subsidiary Swiss, Lufthansa’s passenger airlines continued to make losses in the second quarter. But the demand for tickets remains high, as the Lufthansa management announced at the beginning of August.
Turkish Airlines is also benefiting from the rediscovered desire to travel among people around the world. The number of passengers carried in July was even higher than the same month before the pandemic, at 7.8 million compared to 7.1 million in July 2019. The load factor of the airline’s 386 aircraft averaged 86.1 percent, with the Load factor on international flights was 85.6 percent, on domestic flights 90.1 percent.
Revenues also increased in the cargo area. When the pandemic began a good two years ago, Turkish Airlines expanded the segment. The completion of the cargo terminal at Istanbul’s new airport accelerates this trend. That is why the freight figures were higher in 2022 than in 2019. Comparisons to the same quarters of the previous year make little sense because Turkey was in corona lockdowns for several months at the beginning of 2021.
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However, a major uncertainty factor for Turkish Airlines is Turkey’s further economic development. The economy is currently booming – but so is inflation. A downturn or a sudden further increase in energy prices could hit the airline hard.
Costs increase by 93 percent – calculated in dollars
On the cost side, the company is not only feeling the effects of the increase in raw material prices, but also of the fall in the Turkish lira. The national currency has lost more than two-thirds of its value against the US dollar since July 2019. The inflation rate in the country has climbed to almost 80 percent.
Compared to the same period before the pandemic, Turkish Airlines’ costs increased by 93 percent, calculated in dollars. Converted into lira, the increase is many times higher. It is interesting that, according to Oyak Research, spending on personnel fell by 13 percent at the same time.
The group was also able to drive down its debt. Finance lease liabilities were the equivalent of $8.6 billion at the end of June, according to Oyak. 63 percent of this debt has to be repaid in euros, another 20 percent in Japanese yen, 15 percent in US dollars and two percent in Swiss francs. If the lira continues to lose value in the fall, as financial analysts expect, then the mountain of debt – converted into lira – will rise again.
More: The lira is threatened with a crash that can no longer be stopped.