Ayşe Akalın: Can we get information about Turkish Airlines' expectations and strategic goals for 2023?

Ahmet Bolat: In the first six months of this year, we carried approximately 39 million passengers. This means an increase of 20.1% compared to last year and 9.3% compared to 2019. We expect to carry over 86 million passengers throughout 2023. As of today, we have a fleet of 425 aircraft, including 114 wide-body, 287 narrow-body, and 24 cargo aircraft. By the end of the year, we will reach a fleet size of 435 aircraft. We increased the capacity (ASK) we offered in the January-June period by 18,3% compared to last year. We had already caught up with pre-pandemic capacity in April 2022. We expect to be over 15-20% above 2022 by the end of 2023. We continue our success financially as well. We earned approximately $4.4 billion in revenue in the first quarter of the year. We aim for a total revenue of over $19 billion by the end of the year.

As you know, we recently shared our 10-year strategic goals with the public. We aim to double our capacity with an average annual capacity (ASK) growth of 7.4% until 2033, have a fleet size of over 800 aircraft, carry 171 million passengers by 2033, and aim for a total revenue of over $52 billion.

On the air cargo side, our goal is to be among the top 3 airlines in terms of market share. We will increase the share of high-value special cargo in total cargo revenues to 55% and increase our total cargo carried to over 3.9 million tons in 10 years. In addition, we will create a cargo ecosystem with partnerships, e-commerce, and technology investments and reach a total cargo revenue of $9.6 billion with this ecosystem.

We are corporatizing AnadoluJet, which we launched its operations to also foreign countries in 2020. We are steadily expanding its fleet with new generation aircraft to provide cost and competitive advantages. While it had 64 aircraft at the end of last year, it has 82 aircraft today, and we will increase the AnadoluJet fleet to 200 aircraft in 10 years. As Anadolujet grows, the proportion of new-generation aircraft in its fleet will reach 65% in 2024 and 98% in 2028. 

Digital transformation is very important in achieving differentiation and competitive advantage, and we aim to be among the top 3 airlines in digitalization among airlines. In this context, we attach importance to R&D activities. We will increase the share of R&D expenditures in revenue to 1% by 2033. 

Of course, another important issue here is sustainability. As is known, new generation aircraft have 15-25% less carbon emissions compared to the previous generation. We are also gradually increasing new generation aircraft in our fleet. By 2033, 75% of our fleet will consist of new-generation aircraft. We will achieve an additional 5% fuel consumption savings with operational improvements we will make. Although limited, we started using Sustainable Aviation Fuel (SAF) on certain European routes. We will increase both their number and frequency. By 2050, we aim to be a Carbon Neutral airline. 

The most emphasized issue for Türkiye's flag carrier airline is our contribution to the country's economy. When we reach our strategic goals for 2033, we will have increased our contribution to the Turkish economy to $144 billion. In this context, we will continue our activities for promoting Turkish tourism in coordination with our state institutions.

Ayşe Akalın: Despite the rapid increase in demand for new aircraft in commercial aviation, aircraft manufacturers couldn't respond adequately due to supply chain problems stemming from workforce shortages in medium and small-sized suppliers in 2022. How was Turkish Airlines affected by this process? Have there been delays in new aircraft orders or the procurement of spare parts for existing aircraft? Do you anticipate that supply chain-related delivery issues will continue in 2023? What measures are being considered to address this?

Ahmet Bolat: As the global supply chain continues to suffer, aircraft manufacturers' processes have been significantly and negatively impacted, causing aircraft deliveries to be delayed. Specifically, after Covid 19, we are experiencing delays for A321Neo's in our order book that has been delivered and continues to be delivered until 2025. Similarly, we are also facing supply chain issues with certain aircraft parts. This has a negative impact on maintenance operations and capacity. 

While supply chain issues are expected to continue on a global scale, we do not know how long this will last. In order to manage these ongoing circumstances, which have a direct impact on our operations and capacity, we are making moves to support our fleet, which currently consists of 425 aircraft. In this respect, with the new generation being our priority, we are evaluating the options of purchasing new and existing generation aircraft or long and short-term leasing options in line with market conditions and our capacity needs.

Ayşe Akalın: As the airline that flies to the most destinations globally, could you tell us about Turkish Airlines' current number of aircraft and the new destinations targeted for the end of 2023?

Ahmet Bolat: As of today, we have a fleet of 425 aircraft, including 114 wide-body, 287 narrow-body, and 24 freighter. Of these, more than 100 are new-generation aircraft with high fuel efficiency and are environmentally friendly. By the end of the year, our fleet size will reach 435 aircraft. In the past period of this year, we added Krakow in Poland and Palermo in Italy to our flight network. In the second half of the year, we will restart our flights to Osaka, Japan, where we flew before but stopped flying in 2017, and Detroit in the USA. We also want to add the 6th continent to our flight network by starting flights to Australia as well. 

In addition, there are new airports planned to be opened domestically by the end of the year. If Adana Çukurova, Yozgat Airport, and Bayburt-Gümüşhane Airport become ready for flights and open, we will start flights there as well.

Ayşe Akalın: During your speech at the IATA General Assembly held in İstanbul on June 4-6, 2023, you announced that a total of 600 new aircraft orders would be placed, including 400 narrow-body and 200 wide-body aircraft, with preferences for A320neo and B737MAX models for narrow-body, and B787 and A350 models for wide-body. Turkish Airlines plans to double its fleet to 814 aircraft and increase passenger numbers to 171 million by 2033. Could you provide an update on the ongoing supply efforts and contract negotiations for the wide-body and narrow-body aircraft needs of Turkish Airlines?

Ahmet Bolat: Within the framework of our Incorporation's 2023-2033 strategic plan, our goal is to increase our fleet to 813 aircraft by the year 2033. In line with this objective, we are currently holding dialogues with Airbus, Boeing, engine manufacturers, and other companies. We have communicated our requirements in line with our fleet plan to Airbus and Boeing through letters. Similarly, we have notified engine manufacturers and are awaiting their proposals. In addition, to purchase agreements for narrow-body aircraft, we are also exploring leasing options. Likewise, for wide-body aircraft, we can consider utilizing market opportunities if the need for additional capacity rises. As the flag carrier of Türkiye and the airline that flies to more countries than any other airline in the world, increasing our passenger number while simultaneously renewing our fleet to enhance the quality of service we provide is among our goals.

Ayşe Akalın: What is Turkish Airlines' perspective on Regional Passenger Aircraft? There were reports in written and visual media in 2022 that middle-range, single-aisle models like the A220-300 and Embraer E195-E2 were being considered for regional passenger aircraft needs, and a choice would be made between these two models. Will the selection of the regional passenger aircraft be made in 2023?

Ahmet Bolat: Both Embraer E2 and Airbus A220 will be useful for us. The engine agreement and our expectations will be decisive here. But as you mentioned, our priority here is the total 600 narrow-body and wide-body orders. Considering that the number of regional jets will be around 30-40, their effect on the total capacity will be very low. Our priority is to finalize the narrow-body and wide-body orders. We will look into this issue after shaping the main fleet.

We aim to reach more destinations with regional jet aircraft and ensure operational continuity, thanks to the cost advantages these aircraft may provide. However, in order for the operations to serve Turkish Airlines in the most beneficial way in accordance with our goals, detailed studies are still ongoing. We are continuing our discussions with both companies, and our teams are conducting thorough evaluations. We do not have a specific timeframe for aircraft selection. Our aim is to choose the aircraft that is the most suitable for us and that we can use in the most advantageous way for our operations. In order to decide on the addition of these aircraft to our fleet, we need to minimize the risks involved. The support of the Aircraft and Engine manufacturers in this regard is crucial; they should be as enthusiastic as we are about making this operation happen. We hope that with regional jet aircraft, we will be able to reach new destinations more easily, expand our operations, and carry more passengers with Turkish Airlines.

Ayşe Akalın: Will there be demands such as offset (domestic manufacturing of fuselage and parts) for both wide-body and narrow-body aircraft acquisitions, as well as for Regional Passenger Aircraft acquisitions? With such a significant purchase, what specific requests and demands will be on the table to support our domestic aviation industry?

Ahmet Bolat: As the flag carrier, Turkish Airlines works with great devotion to increase the investments of manufacturers in Türkiye and to contribute to the development of the aviation ecosystem. Until now, within the framework of our current agreements, manufacturers generate direct jobs in the Turkish aeronautical industry and continue to develop their sourcing in Türkiye to procure a level of Billions$ of turnover from Turkish suppliers. Turkish Airlines subsidiaries and Turkish Companies have been an integral part of the supply chain for over 20 years and are a partner in the main aircraft programs of aircraft manufacturers.

It will be our first priority from the manufacturers to long-term industrial cooperation through the placement of work packages that include the transfer of technology, which help to build skills and competencies in the Turkish aviation industry and increase the business volume and turnover of our companies. 

Turkish aeronautical industries progressively embarked on high capabilities and skills in the last 10 years, and in this context, with the new aircraft bidding and aim of positioning Türkiye as a strategic growth country for manufacturing companies, our commercial negotiations will continue with companies under the headings of development of industry& technology, manufacturing, service-maintenance-repair work packages, and qualified manpower training.

Ayşe Akalın: Could you tell us about the planned new pilot and cabin crew recruitments for 2023? How was Turkish Airlines affected by the Turkish Air Force's call of retired pilots to duty? How is the pilot shortage being addressed?

Ahmet Bolat: The aviation industry has had difficult times in the last 3 years. Especially during the pandemic, many airlines parted ways with their employees in these difficult conditions, but we preferred to protect our team, and we all saw and experienced the positive outcomes of this. We have overcome the difficult times we have experienced together as the entire Turkish Airlines family, and we continue to achieve greater success together. In pilot recruitment in 2023; 

• 577 Inexperienced II. Pilot (Typeless), 

• 79 Experienced II. Pilot, 

• 9 Experienced Captain Pilot 

• 155 II. Pilot candidates to be trained, a total of 820 people have completed their evaluation processes, and their recruitments have been realized. In addition, evaluation processes for the closed II. Pilot candidate and inexperienced pilot announcements are still ongoing. We continue to carry out additional employment in addition to the experienced and inexperienced pilot recruitments we mentioned. We plan to reopen these announcements according to the needs and training capacity situations and continue to grow and employ without slowing down. 

We currently have approximately 6400 pilot employees in total. Our experienced pilot announcements are currently available on our official career website, kariyer.thy.com. In addition to experienced pilots who start working, we continue to recruit new ones. Our experienced candidates can review the announcements on the career site and apply.

In cabin crew recruitment in 2023

With the announcement opened for our summer season needs in 2022 for our needs in the summer season of 2023, a total of 1900 Cabin Crew employees joined the Turkish Airlines family, and with this recruitment, the total number of our cabin crew reached 14,500. Our cabin crew announcement is currently available on our career site (kariyer.thy.com) for the cabin crew need for the summer season of 2024, and applications are still ongoing. This announcement will be removed from publication on August 10, 2023, and evaluation processes will begin. Our candidates who want to become Cabin Crew and meet the announcement criteria can apply. At least 2000 cabin crew members are also targeted to be recruited for next year.

In addition, evaluation processes for our Disaster Victim Cabin Crew announcement published in April and applied by around 13 thousand candidates are still ongoing. Within the scope of this announcement, we are going to Adana and Gaziantep in July to conduct interviews in the region. Within the framework of the Disaster Victim Cabin Crew announcement, we want to gain approximately 300 candidates from the earthquake region into our big family.

Ayşe Akalın: Can we have your assessment of Turkish Airlines' market value as of June 2023?

Ahmet Bolat: During the last twelve months, our strong operational and financial performance translated into a significant increase in our share price and market value. Turkish Airlines share price rose by more than 150% year over year, marking one of the highest in the industry. As a result, we became the 13th biggest airline in terms of market value of US$ 10.3 billion rising from the 25th in June 2022. We also became the second largest company in Borsa İstanbul, climbing from the 9th last year by considerably overperforming Borsa Istanbul 30 Index.

Ayşe Akalın: What advantages does İstanbul Airport provide to Turkish Airlines and Turkish Civil Aviation?

Ahmet Bolat: Istanbul Airport is the transfer hub where the world meets each other, thanks to its geographical location. With the increased slot and capacity offered by Istanbul Airport to us and other airlines, growth in existing and new markets can be supported. We started to feel the positive impact of the airport, where we manage the majority of our operations, especially after the third runway was put into service. While the number of flights per hour during the peak period was 72 at Atatürk Airport, with Istanbul Airport, we increased this number to 110-120. In addition, the decrease in our aircraft waiting rates has become an important advantage for both financial savings and uninterrupted operations. 

Aiming to become one of the world's largest hubs in the field of cargo, Istanbul Airport is one of the best cargo facilities in the world in terms of infrastructure and technology. As of 2022, we combine all our cargo processes with our SmartIST cargo facility, which has an annual cargo handling capacity of 2.2 million tonnes. Istanbul Airport and SmartIST offer the opportunity to connect our share in global trade from Istanbul with our increasing service quality and capacity.

Istanbul Airport has had a major impact on Türkiye's transformation into a major player in global aviation with the advantages it provides. While Türkiye ranked 7th in the international passenger market in 2022, more than 40% of international passengers were carried from Istanbul Airport. For the third consecutive year in 2022, Istanbul Airport was the airport that welcomed the highest number of passengers in Europe and ranked 2nd in the world in terms of international hub connectivity in June 2023. The contribution of Istanbul Airport to Turkish Airlines and Turkish Civil Aviation will increase exponentially along with the participation of new airlines starting to fly to Istanbul.

Ayşe Akalın: In May 2023, Turkish Airlines Flight Academy (TAFA) signed an agreement with TUSAŞ to produce a total of 20 single-engine, propeller training aircraft in Türkiye, 10 of which are firm orders and 10 are options. Can we get information about the timeline of this agreement and the technical specifications of these aircraft to be delivered?

Ahmet Bolat: TUSAS plans to deliver a total of 20 aircraft (10 in 2026, 10 in 2027) to Turkish Airlines Flight Academy,

The features that are requested to be in airplanes are briefly:

• Single-engine (Lycoming if it's possible)

• 4-seat aircraft.

• Autopilot system,

• ADSB in/out system,

• TAS (Traffic Advisory system)- (the system that reports air traffic and where aircraft see each other)

• Aircraft tracking/imaging system (system for viewing the aircraft from the ground and by DGCA(SHGM))

• Latest Avionic systems (Garmin 1000 or equivalent)

• EASA certificate.

Ayşe Akalın: Can we get information about the number and models of flight simulators in Turkish Airlines' service? Is there a plan to increase the number of simulators parallel to the increase in aircraft and pilot numbers? Could you enlighten us about the modernization efforts of existing simulators, ongoing procurement efforts for new simulators, and the simulators ordered under the contracts signed with HAVELSAN, as well as their delivery statuses?

Ahmet Bolat: Turkish Airlines has 24 full-flight simulators (FFS) operating at two training centers close to the Atatürk Airport in Istanbul. All simulators are certified by EASA (European Aviation Safety Agency) and qualified with a CS-FSTD Level-D training certificate. Our state of art full-flight simulators fulfill not only THY's pilot training needs but also serve training to third-party airline operators. 

Our simulator fleet consists of the following types;

7xB737 simulators,

3xB777 simulators,

2xB787 simulators,

6xA320 simulators (two of them CEO/NEO convertible),

4xA330 simulators and (one A330/A340 convertible) and  2xA350 simulators.

As part of THY's growth projection of the aircraft fleet for the next 10 years, a proportional increase in the number of simulators is expected to serve the future high demand for pilot flight training.

As all of our flight simulators are EASA certified, they are modernized with regard to the aviation regulatory requirements published by EASA in terms of the continuity of the certificate, as well as taking into account the modernization works carried out on the aircraft fleet.

5 Full flight simulators (2x B737-MAX and 3xA320 NEO/CEO convertible simulators) have been purchased from Turkish Simulator manufacturer Havelsan A.Ş. in Ankara. One B737-MAX was already delivered and qualified by EASA in April 2023, and it is presently in training operation at the THY Flight Training Center. We are expecting delivery of a second B737-MAX simulator and one A320 CEO/NEO by the end of this year. The remaining two A320 simulators will be delivered in 2024