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İbrahim Sünnetçi

Achieving a Great Financial Success in 2022, Turkish Airlines Plans to Bring US$17 Billion to Türkiye in 2023!

Issue 16 - 2023
Achieving a Great  Financial Success in 2022, Turkish Airlines Plans to Bring  US$17 Billion to Türkiye in 2023!

Turkish Airlines (THY), the flag carrier airline of Türkiye, was established on May 20, 1933, with an initial fleet of 5 planes and less than 30 personnel for air transporting passengers and cargo in the country and abroad. As the 9th largest airline company in the world in terms of fleet size with 412 aircraft (278 narrow body, 111 wide body, and 23 cargo planes), Turkish Airlines proudly waves our flag as a 5-star global airline company that flies to most countries in the world with an extensive flight network serving 342 destinations in 5 continents and 129 countries today (April 2023).

THY, which is preferred in the Civil Air Transport (CAT) sector for its flight safety, reliability, product range, service quality, and competitive position, has chosen to be a leading and globally active airline in Europe as its mission. THY's vision is:

• Continuing the growth trend above the sector averages,

• Zero accidents and breakdowns,

• An exemplary service mentality in the world,

• Unit costs equivalent to low-cost carriers,

• Selling and distribution expenses below industry averages,

• Loyal customers who do their own booking, ticketing, and boarding operations,

• Personnel who know that the benefit from the institution is proportional to the added value they created,

• Commercial agility that creates jobs for Star Alliance partners and utilizes the potential offered by them,

• Stands out with its management that adopts modern management principles, taking into account the interests of its shareholders and all its stakeholders.

Continuing to grow rapidly since its establishment, the flag carrier airline Turkish Airlines has 7 subsidiaries and 11 businesses under joint management, and the total number of employees, including subcontractors, has exceeded 75 thousand. THY improves its sustainability performance every year with investments, projects, and good practices by following global trends and innovations in the sector and carries out its activities to increase its positive impact on the world. THY, which is among the top 3 most well-known airline brands in the world, has increased its market share more than three times in the last 20 years and gained the most market share between 2010-2022. 

THY's Operational and Financial Results in 2022

Having made a strong recovery after the first shock of the COVID-19 pandemic, THY distinguished itself from its competitors with its operational and financial results throughout 2022, thanks to its operational agility and the highly qualified workforce it maintained during the pandemic period. According to the statistics published by the International Air Transport Association IATA, while the global aviation sector reached 72% of its 2019 capacity in 2022, THY achieved a faster recovery compared to the sector, reaching 108% of its 2019 capacity in 2022.

While distinguished positively from the international aviation sector with its traffic results in 2022, THY also achieved great success with its financial results. According to the figures shared by THY, between January 1 to December 31, 2022, our National Flag Carrier increased passenger revenues by 28% and cargo revenues by 121% compared to 2019 and generated US$18.4 Billion in revenue. According to the statement made by THY to the Public Disclosure Platform (PDP), THY made 47,432 Billion TRY profit in 2022. With the strong recovery in demand and operational agility, THY increased its total revenues by 39% in 2022 compared to 2019, more than doubled its cargo revenues compared to 2019, more than tripled its Core Operating Profit compared to 2019 and achieved profitability above the sector average with its Operating Profit and 15.1% Operating Profit Margin. Despite the difficult conditions of the COVID-19 pandemic, THY has made a profit for the last 6 consecutive quarters and has become one of the most profitable airlines in the world in 2022.

At the beginning of 2022, while the effects of the COVID-19 outbreak still persist, rising geopolitical tensions have once again affected the aviation industry. The mutual closure of airspaces and the suspension of flights had a negative impact on both demand and costs for the aviation industry due to rising oil prices. In addition, operational difficulties occurred at European airports due to the lack of personnel. Despite all this, THY continued its operations uninterruptedly in 2022 with 394 aircraft, which are among the youngest and most modern fleets in the world, thanks to the highly qualified workforce it protected during the pandemic period and carried 71,818 million passengers in total, with 85.8% occupancy on domestic flights (25.8 million) and 80.1% on international flights (46.3 million), reaching 97% of the number of passengers in 2019 (74,282 million). In 2022, when the problems caused by the lack of personnel and infrastructure were felt to a large extent, Turkish Airlines continued its operations without interruption, much more successfully than European Airlines. According to IATA data, the aviation sector's global international flight ASK (Available Seat Kilometers) reached 65% of 2019 in 2022, while the European international flight ASK reached 80% of 2019. THY continued to differ significantly from peer airlines in the same period and exceeded the 2019 ASK figures by 10%. In addition, according to the European Organization for the Safety of Air Navigation (Eurocontrol), THY became the top airline with the most flights in Europe among network carriers in 2022. According to IATA data, in the third quarter of 2022, when flight operations intensified, European airlines canceled 6 times more flights than THY.

Despite the pressure of global inflation, THY continued its strong cost management by reducing its unit expenses excluding fuel by 2% in 2022 compared to 2019, and thus, THY's earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) was approximately US$ 5.4 billion in 2022, pointing to its potential to generate cash. The number of Turkish Airlines personnel, which was 27,532 as of December 31, 2021, increased by 7% to 29,520 as of December 31, 2022. 

THY's cargo revenues, which comprise 20% of total revenues, increased by 121% to approximately US$ 3.7 Billion between January 1 and December 31, 2022, compared to 2019. In February 2022, THY moved to the new cargo operations center SMARTIST at Istanbul Airport, which is the largest Cargo Terminal in Europe and the 3rd largest in the world. Turkish Cargo has quadrupled its market share in cargo transportation in the last 10 years (from 1.3% in 2012 to 5.2% in 2022) and increased its cargo revenue from US$1,317 Billion in 2017 to US$3,735 Billion in 2022. Turkish Cargo flies to 355 destinations in 132 countries with 21 cargo and 373 passenger aircraft. According to the 2022 data published by the International Air Transport Association IATA, Turkish Cargo clinched its success as the world's 5th largest air cargo carrier in the cargo market.

Chairman of the Board and the Executive Committee of Turkish Airlines, Prof. Ahmet BOLAT, made a statement earlier this year and expressed his goals regarding Turkish Cargo. "Leading up to our 2028 and 2033 strategies, we aim to increase the share of products and services with increased added value by improving our Turkish Cargo brand's business model, as well as our infrastructure and technology investments. In addition to the conventional airport-to-airport transportation model, we are working on a logistics ecosystem. These efforts include existing markets and our products, but we also aim to grow and diversify in different markets through partnerships and investments where necessary. With all these investments and strategies, we aim to be one of the world's top 3 air cargo companies with our Turkish Cargo brand in the future." 

Evaluating the results on his social media account, the CEO of Turkish Airlines, Bilal EKŞİ, said, "We have successfully completed the year 2022. We carried 71.8 million passengers and transported 1.7 million tons of cargo. We finished the year with 394 planes. We will achieve greater success in 2023."

Started its operations as a low-cost carrier (LCC) subsidiary of THY in 2008, AnadoluJet made its first international flight from Sabiha Gökçen Airport on March 29, 2020, and increased its international capacity share by 51% in 2022 compared to 2019. AnadoluJet, which has 64 aircraft in its fleet (as of December 31, 2021), flew to 168 destinations between January 1 and December 31, 2021, and increased its destinations to 180 between January 1 and December 31, 2022. AnadoluJet's occupancy rate between January 1 and December 31, 2022, is 82.9% (62% domestic and 38% international passengers), while 70% of AnadoluJet's international destinations are in Europe, and 30% are in the Middle East. According to the '2022 Results Investor Presentation' made by THY, AnadoluJet's targets for 2023 have been determined as follows:

• Reducing low unit costs even more with 15 new generation aircraft that will enter the fleet in 2023,

• Increasing access to high-growth holiday destinations through direct international flights,

• Growing in the segment of ethnic travel from Europe, the Middle East, and Central Asia to Türkiye,

• Reaching price-sensitive customers,

• Increasing the share of side incomes in total income via new products and product groups. 

Undoubtedly, the Chairman of the Board and the Executive Committee of Turkish Airlines, Prof. Ahmet BOLAT, has a significant role in the performance of THY and AnadoluJet in 2022. After serving in various positions within the company for 17 years, Prof. Ahmet BOLAT, who took the post of Chairman of the Board and the Executive Committee in January 2022, made significant changes in Turkish Airlines in a short period from its employees to its fleet structure and from AnadoluJet to catering services. BOLAT made the following statement about AnadoluJet's performance in 2022 and its targets for 2023, "As you know, we began international flights with AnadoluJet in 2020. We added new generation aircraft to its fleet to support AnadoluJet's growth and make it more competitive. In order to meet the increasing demand, especially during the summer months, we added a total of 16 aircraft to AnadoluJet's fleet (7 B737-8 MAX, 7 A321NEO, and 3 A320NEO) and increased AnadoluJet's fleet to 64 aircraft in a short time. We are transforming AnaoluJet into a low-cost, practical, and economical airline. We will continue supporting AnadoluJet's transformation and growth both in domestic and international destinations with new-generation aircraft. In 2023, we will continue to add new generation aircraft to AnadoluJet's fleet that offers higher flight comfort and enable us to reach more passengers with their high capacity. By the end of the year, we will add 8 new-generation narrow-body aircraft to AnadoluJet's fleet, increasing the total number of aircraft to over 80. In the past, there were only 737-800s with 189 seats in AnadoluJet's fleet. By converting the next-generation A321NEOs to high-density configuration, we will further reduce unit costs and increase competitiveness."

In his statement to Anadolu Agency on December 27, 2022, BOLAT stated that AnadoluJet has nearly 30 new-generation aircraft and wants to find new aircraft to meet the growing demand. "We have 67 aircraft in AnadoluJet, which we have budgeted for this year. We want to increase the number of our aircraft because there is a high demand for domestic flights. From March, we will increase the frequency of AnadoluJet by 50% on domestic flights. At the same time, our international network is also growing. AnadoluJet will become an efficient and economical airline company, which we call a low-cost airline, in Sabiha Gökçen Airport."

Established with 100% Turkish Airlines capital in 2006 as one of THY's 7 subsidiaries and merged with Turkish Airlines HABOM Inc. in June 2015, Turkish Technic closed 2022 with the highest revenue figure in its history. According to Turkish Technic's 2022 financial reports (published by THY Press Office in March 2023), the company grew by 37% in 2022 compared to the previous year and earned US$1.42 Billion USD in revenue, increasing its market share to 1.9% in the same period. Thus, the company achieved the highest growth rate and earnings in its history.

Adding new capabilities every year in line with the needs of the aviation industry, Turkish Technic achieved many new achievements in 2022. In this context, the company completed the first base maintenance operations for Boeing 787 Dreamliner and Airbus A350 aircraft in 2022 and also carried out the first maintenance operation on Boeing 777-300 ER landing gears within the same year. Incorporating 1,193 aircraft part numbers in 2022, the company expanded its capabilities and the range of services it offers to its customers. Providing component and aircraft maintenance services to several airlines in different parts of the world, Turkish Technic continues its activities in its hangars at 5 different airports in Ankara, Aydın, and Istanbul (ATATÜRK, Istanbul, and Sabiha Gökçen Airports) in order to increase the number of foreign airlines it serves and its market share. In 2022, Turkish Technic provided base maintenance services to 649 aircraft and maintenance-repair services to 221 landing gear and 119,950 components.

Chairman of the Board of Directors and the Executive Committee of Turkish Technic, Prof. Ahmet BOLAT, made a statement about the performance of Turkish Technic in 2022. "Thanks to the capabilities that we have catered to the needs of the aviation industry and our maintenance capacity, we provide a perfect maintenance-repair service to our domestic and foreign customers. We left 2022 behind by achieving our goals and exceeding the growth level and income figures in the pre-pandemic period. We achieved great success in our company's history with a revenue of US$ 1.42 Billion and an operational profit of US$ 119 Million in the same period. We thank our customers for their trust in our company and express our gratitude to our employees for their perseverance and dedication."

THY's Fleet and 2023 Targets

As one of the youngest and most modern fleets in the world, Turkish Airlines' fleet consisted of a total of 370 aircraft as of the end of 2021 (246 narrow body, 104 wide body, and 20 cargo); it reached a total of 394 aircraft by the end of 2022 (263 narrow body, 110 wide body, and 21 cargo). In 2022, 31 additional aircraft were added to the fleet, including 13 x A321NEO, 8 x B737-8 MAX, 6 x A350-900, 3 x A320NEO, and 1 x B787 Dreamliner. As of December 31, 2021, the average age of the fleet is 8.0 years for wide-body aircraft, 8.7 years for narrow-body aircraft, and 9.8 years for cargo aircraft. The overall total is 8.7 years. In his statement in April, BOLAT pointed out that fleet structuring and Human Resources will again be the main themes in the "10-year Strategies and 2033 Targets" to be announced on April 13, 2023. "In short, we are planning a THY that will double in size but together with an Ecosystem that will triple in size with its contribution to the economy. "BOLAT said the following about THY's current fleet. "We currently have a fleet of 412 aircraft, including 278 narrow-body, 111 wide-body, and 23 cargo aircraft. We are the 9th largest airline company in the world by fleet size. In line with our growth strategy, we plan to bolster our main brand fleet with a total of 12 wide-body aircraft (7 x 787-9, 4 x A350-9, 1 x A330-200) and 3 narrow-body A321NEO for the remainder of the year. We currently have orders for 82 new generation aircraft, including 49 narrow-body and 33 wide-body, and we plan to receive these aircraft by 2028. In general, our enlargement goals are, of course, not limited to these orders. As part of our vision and strategies, we will definitely have new orders soon to reach our short, medium, and long-term goals."

In a statement to Anadolu Agency on December 27, 2022, BOLAT shared his assessment for 2022 and expectations and targets for 2023. BOLAT stated they plan to carry more than 88 million passengers and add 6 new destinations to their flight network in 2023 when they plan to earn US$17 Billion. "We will create 9-10 thousand new jobs that will support our 17% growth target. We plan to carry more than 88 million passengers in 2023. This year, we aim to increase the number of international flights to 293 by adding Denver and Detroit (USA), Katowice (Poland), and Palermo (Italy). We will increase the number of destinations to 348 by adding Yozgat and Bayburt (to our total flight network)." Referring to the latest situation in aircraft orders, BOLAT emphasized that the number of aircraft in the fleet will be increased to 427 by the end of 2023. "There were some problems with the manufacturers. These are about to end. In 2023, we aim for a 17-20% capacity increase in our already accepted budget." 

THY's First Quarterly Performance in 2023

In the first week of April, Turkish Airlines (THY) announced its 3-month traffic figures, covering the period from January to March 2023. Accordingly, Türkiye's flag carrier airline, THY, carried a total of 6.1 million passengers in March 2023 and 17.1 million passengers in the 3-month period between January and March. THY's total number of passengers in March 2022 was 4.8 million, and 12.7 million between January and March 2022. Thus, THY achieved a 27.5% increase in the number of passengers this year compared to March 2022 and 34.7% in the January-March period.

THY's traffic results for March 2023 are as follows: 

• While the number of transfer-transit passengers was 1.5 million in March 2022, it increased by 67.8% to 2.5 million in the same period of 2023. 

• The total passenger occupancy rate increased by 6.1 points and became 81.9% in March 2023 compared to the same period in 2022. The international occupancy rate became 82.3%, while the domestic occupancy rate became 77.7% in March 2023. 

• While the Available Seat Kilometers (ASK) was 13.8 billion in March 2022, it increased by 32.4% in the same period of 2023 to 18.3 billion. 

THY's traffic results between January - March 2023 are as follows: 

• While the number of transfer-transit passengers was 4 million between January - March 2022, it increased by %71.4 to 6.8 million in the same period of 2023.

• The total passenger occupancy rate increased by 11.1 points and became 81.3% between January - March 2023 compared to the same period in 2022. The international occupancy rate was 81.4%, while the domestic occupancy rate was 80.1% in the same period.

• While the Available Seat Kilometers (ASK) was 38.8 billion between January - March 2022, it increased by 33.3% in the same period of 2023 to 51.8 billion. 

• By the end of March 2023, the number of aircraft in the fleet reached 411. 

The data above does not include free passenger and cargo transports carried out between February 6 and March 31 due to earthquakes in Kahramanmaraş. In the relevant period, 433 thousand citizens, as well as search & rescue and aid teams, were carried to the region, 430 thousand citizens were evacuated, and 29 thousand tons of aid materials were sent to disaster areas. 

Chairman of the Board and the Executive Committee of Turkish Airlines, Prof. Ahmet BOLAT, shared the following information about the THY's support in relief efforts after the earthquakes in Kahramanmaraş on February 6. "With the responsibility and awareness of being the flag carrier airline of our country, we mobilized all our resources right after the earthquake in Kahramanmaraş on February 6 and carried 433 thousand search & rescue teams and 16 thousand tons of aid materials to the region with over 2,400 flights so far. We also evacuated 430 thousand of our citizens. After the earthquake disaster, we took the responsibility to heal the wounds. In addition to our 2 Billion TRY donation to AFAD in cash, we started working with the Ministry of Environment, Urbanization, and Climate to construct 1,000 houses. By employing one person from 1000 families affected by the earthquake, we will add 1,000 people to the Turkish Airlines family." BOLAT also announced in a post on April 12 from his LinkedIn account that 500 children from the earthquake zone will be brought to Istanbul with their guardians and hosted for 2 days during the Feast of Ramadan. BOLAT also announced that they will give a net 15,000 TRY Holiday Bonus to all 75 thousand employees. "We gave Ramadan bonus last year, but it was in a narrower scope and was 5 thousand TRY. This year, we will give 15 thousand TRY to all our 75 thousand employees as an equal holiday gift to everyone, regardless of position or rank." 

BioJet Fuel_Turkish Airlines Airplane

Sustainability, Combating Climate Change and Using Sustainable Aviation Fuel (SAF) 

Almost all of the airlines' emissions come from the combustion of aviation fuel. With over 100 operational optimization projects successfully implemented since 2008 to reduce the carbon footprint, Türkiye's flag carrier Turkish Airlines, saved 57,581 tons of fuel in 2022 alone, thus preventing the release of 181,379 tons of carbon emissions into the atmosphere.

THY is aware of the aviation industry's impact on climate change and the key role Sustainable Aviation Fuel (SAF) played in achieving its emission reduction target. Therefore, THY includes the use of Sustainable Aviation Fuel for long-term emission reduction in its plans and supports SAF R&D efforts to reduce and eliminate factors that may impact climate change. At the same time, THY expands and improves its fleet with young, fuel-efficient, and more environmentally friendly aircraft.

Directing its sustainability strategy under the umbrella of the Sustainability Committee established in 2021, Star Alliance member Turkish Airlines (THY) improves its sustainability performance every year with investments, projects, and best practices by following global trends and innovations in the sector and carries out its activities to increase its positive impact on the world. Turkish Airlines, which has made a name for itself in the national and international arena with its sustainability-oriented activities, was deemed worthy of the "Most Sustainable Flag Carrier" award as part of the "2022 Sustainability Award" organized by World Finance, one of the respected institutions of the international finance world. Working with a Zero Waste policy in the field of sustainability, THY won this award for having one of the most modern and youngest fleets in the world, its commitment to gender equality, its fuel saving, and emission reduction projects implemented under combating climate change, its support to R&D Projects in use of biofuels, its flexibility in the management of the pandemic process and strong financial performance. THY, together with Boğaziçi University, also won the Airline Sustainability Innovation of the Year award by CAPA - Centre for Aviation in 2022 for its support of the TÜBİTAK's MICRO-JET (Microalgae Based Sustainable Bio-Jet Fuel) Project, which aims to produce Sustainable Aviation Fuel (SAF) from microalgae.

MIKRO-JET Project aims to produce synthetic bio-kerosene from microalgae using hydrotreated fatty acids and hydrothermal liquefaction methods. This biofuel, which will be obtained from sustainable sources, will be used in the aircraft of the THY fleet following the engine tests to be carried out by Turkish Technic. The sustainable aviation fuel that Turkish Airlines will use provides a greenhouse gas emission reduction of up to 87% compared to the same amount of conventional kerosene fuel. When the project is completed, Türkiye's and Europe's first carbon-negative integrated biorefinery will become operational.

Türkiye's flag carrier airline, THY, has taken an important step by using Sustainable Aviation Fuel (SAF) on its Istanbul-Paris flight on February 2, 2022, to go beyond today's gains and create value in the future. THY currently uses SAF on certain flights. THY flies to destinations such as Paris, Oslo, Copenhagen, and Stockholm using environmentally friendly fuel. In this context, THY plans to expand the SAF, which it regularly uses on flights once a week, to different destinations with increasing frequencies in the future, within the limits of technical, regulatory, safety, and commercial applicability. THY signed the Global Sustainable Aviation Fuel (SAF) Declaration with the participation of Rolls-Royce and Airbus on October 7 during the Istanbul Airshow held in October 2022.

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