Cem Akalın: Earlier this year, Türkiye experienced a devastating earthquake. What role did Pegasus play in response to the crisis?

Güliz Öztürk: We have been experiencing challenging times as a country. The pain we felt in the aftermath of the earthquake on 6th February is still fresh. I would like to again commemorate those who lost their lives - may they rest in peace - and wish a swift recovery to the injured.

From the first day of the earthquake, we have worked tirelessly in the field of transport, which plays a critical role, especially in such challenging times. We operated domestic flights from Adana, Adıyaman, Diyarbakır, Elazığ, Gaziantep, Malatya, Kahramanmaraş, Şanlıurfa and Hatay free of charge between 7 and 28 February 2023 for those affected by the earthquake. Between 6 and 28 February 2023, we evacuated more than 150,000 people from the earthquake zones with 785 free evacuation flights. During these flights, we carried 110 tonnes of aid materials also free of charge. We carried more than 125,000 people and rescue teams on flights to the disaster zone. As well as continuing our transportation support, we also supported citizens affected by the earthquake with financial aid.  We recognise the need for long-term solidarity and as the Pegasus family, continue to do our part in assistance efforts, to sustain this support on a long-term basis.

Cem Akalın: In 2022, with the gradual return to normalcy in the aviation industry, how did Pegasus perform?

Güliz Öztürk: To meet the increased travel demand that has followed the easing of restrictions, we have made sure that our operational structure and our colleagues across all our business departments were ready; and we have increased our capacity and enlarged our network with new destinations and frequencies. As a result of our meticulous and strategic efforts, we concluded 2022 successfully. Our 2022 revenue increased by 41% compared to 2019, which was the last full pre-pandemic year. Our passenger numbers grew by 33.7% year on year and its turnover by 139% to reach €2.45 billion. Reaching an EBITDA margin of 34.1% at the end of 2022, we achieved the highest performance in this metric for the aviation industry globally. We are on course to continue this success into 2023.

Cem Akalın: Pegasus is a growing airline. What are some areas of future growth?

Güliz Öztürk: Our operating region spans Europe, the Middle East, North Africa, and Central Asia, and we see a significant growth potential both in the total market and in the demand for low-cost carriers. Our fleet and network investments are dedicated to stimulating diversified growth across these regions while focusing on contribution to the network value. We currently have the lowest unit cost in the world, and we have a sizeable fleet growth in the pipeline to over 120 aircraft in 2025 from 96 in 2022. 

Cem Akalın: Pegasus’ current fleet strategy outlines a gradual switch to an all-Airbus fleet. What is the reasoning behind this strategy?

Güliz Öztürk: In 2012 we placed the single largest-ever aircraft order in Turkish civil aviation history at the time for 100 new Airbus A320neo and Airbus A321neo aircraft, and we have further extended our order to 114 aircraft. We plan for our fleet to consist solely of new generation A320neo and A321neo aircraft in the long-term. As an airline operating on a low-cost model, we seek efficiency in our day-to-day operations and we pay a great deal of attention to effective cost management. Our fleet transformation strategy is a key driver on these fronts. A fleet structure consisting of younger and more eco-friendly aircraft is also an integral part of our sustainability strategy. As a happy coincidence, we envisage that hopefully, Pegasus will reach its 100th aircraft milestone on the 100th anniversary of Republic of Türkiye later this year.

Cem Akalın: Beyond investing in a new fleet, what measures are you implementing as part of your sustainability efforts?

Güliz Öztürk: For the airline industry, there are no easy solutions to the environmental sustainability issue. One of the main concerns as airline CEOs looking ahead will be our determined efforts in line with IATA's commitment to Net Zero Carbon Emissions by 2050. As Pegasus, we have reinforced our commitment to this goal with our interim target for 2030.  We aim to reduce our flight-related carbon (CO2) emissions per unit passenger kilometre (RPK) by 20% by 2030 compared to 2019. We continue working to increase the use of Sustainable Aviation Fuels (SAF).  

As Pegasus, being a low-cost carrier, we focus on efficiency, productivity, optimisation - and those also lead to lower fuel consumption & lower carbon emissions. Small environmental improvements can be made with operational efficiencies, but actually much bigger gains can be achieved by investing in new generation aircraft. Even with almost 100 aircraft, we now operate one of the youngest fleets in the industry and this can be another major focus for airlines in the near term.  In addition, a lot of efforts already implemented to reduce weight and to use of resources in an efficient manner that led to lower fuel consumption directly translate into lower carbon emissions. We are aware that on top of all the investments and effort, we still have a significant gap to close until we eventually achieve net-zero carbon emissions operations by 2050. Considering technologic impediments, increasing use of sustainable aviation fuel, and perhaps to a certain extent carbon capture tools will be required.

Cem Akalın: You recently took out a sustainability-linked aircraft-secured term loan. Could you tell us more about it?

Güliz Öztürk:Last year, we financed 10 new A321neo aircraft joining our fleet with a sustainability linked loan. This was the first of its kind for an export credit agency supported aircraft finance transaction. The terms of the loan are indexed on future achievements in respect of two sustainability-linked Key Performance Indicators (KPIs): carbon intensity of flights and gender diversity in management positions.  

The loan is applied for the new generation, fuel-efficient CFM Leap powered and less CO2 emitting Airbus A321neo aircraft financing. This transaction is highly innovative and remarkable in several respects: it is the first-ever aircraft export credit facility incorporating sustainability-linked features, as well as the largest aircraft-secured sustainability-linked term loan executed in the market to date.

With this financing, we reaffirmed our commitment to our long-term goals on carbon emissions and gender equality by addressing both environmental and social initiatives.  I'm very proud of our entire team who pioneered this ground-breaking deal.

Cem Akalın: How did it come about, and what are the criteria? 

Güliz Öztürk: As Pegasus Airlines, we are committed to IATA’s 2050 Net Zero Carbon Emissions target. We have long-standing investment in making our operations less carbon intensive. We started utilising new generation A320/321neo family aircraft in our fleet back in 2016 and we became the launch customer of new generation CFM-Leap engines on our A320neo aircraft. Today, 75% of our fleet consists of new generation A320/321neo family aircraft. We do not see this strong transformation as sufficient for our future commitments. We are always seeking new ways to engage in different projects with potential to drive value out of investing in our sustainability principles. 

Cem Akalın: How is Pegasus following up on its commitments in the areas of diversity, equality and inclusion (DEI)?

Güliz Öztürk: Diversity has always been integral to our vision. We aim to carry out all our DEI actions under the umbrella of our initiative Pegasus Harmony. We aim to make everyone’s voice heard.  For example, our company is now made up of 35% women, including 73 female pilots. At our head office, it is 47% women. This has been an important factor in our success, which is why we understand that this is a continuous journey. Though our work does not stop there.

Just a few of our other initiatives include monitoring and regularly reporting metrics related to DEI on our balance score card and risk reporting held throughout the company. We are the first airline in the world to join the UN Women’s Empowerment Principles platform in order to emphasize the role of women in business life and the importance we attach to the principle of equality. We continuously support organisations that focus on gender equality. In 2019, we signed IATA’s 25by2025 gender balance pledge to improve female representation in the industry by 25%, or up to a minimum of 25% by 2025. By signing that, we made a commitment to ensure gender balance within our company and by 2022, we had already surpassed our pledge. 

The World Economic Forum estimates it will take us 132 years to achieve gender balance, but this should not frustrate us. We all know that this is a long journey; however we should have a relentless focus individually and at a corporate level on this issue, together with proactive policies and with serious intention and action, we will certainly take a step forward.

To achieve this, challenging and changing the existing gender norms needs to be a daily and industry wide effort and a critical component in our goals on culture and leadership