Strong demand in the passenger business during the first half has prompted Turkish Airlines to lift its full-year EBITDA expectations, despite a sharp fall in cargo revenues.

The carrier has been one of the strongest performers since the Covid crisis and posted a profit of $794 million from its main operations in the second quarter. It marked the carrier’s eighth consecutive profitable quarter.

Vilnius airport

Source: Renatas Repcinskas/Shutterstock

Turkish Airlines’ freighters helped the group to an operating profit in the second and third quarters of 2021

Speaking on a second-quarter results call on 10 August, Turkish Airlines chief financial officer Murat Seker said: “Our revenue performance in the second quarter saw significant year-on-year improvement, despite strong headwinds from the decelerating global cargo demand and the [February 2023] earthquake impact.”

Revenues increased 13.5% to $5.1 billion – a record for the second quarter. “Passenger revenue increased by 31%,” Seker says. ”I believe that is particularly noteworthy considering the high base we had last year.” It carried 22 million passengers over the three months ended 30 June, a 19% increase on the previous year.

“As a result of robust international demand, particularly in the Far East and the Americas, total load factor climbed by more than two percentage points to 81.7% – exceeding 2019 levels,” he says.

Excluding the financial impact of the earthquake and inflation-driven pay rises, profitability would have been $240 million higher in the second quarter.

“This summer is going strongly, demand to Turkey is also strong,” Seker adds. “We are expecting the number of tourists to increase by 17% to reach 60 million visitors to Turkey and given our dominance in the Turkish market, we will be able to get the benefits out of it.”

This demand, together with the strong first half, has prompted the carrier to raise its full-year EBITDA margin guidance to the 25-27% range, up from 23-25% previously.

That bright outlook comes despite a marked decline in air cargo. That business was a key part of the Turkish Airlines’ financial success after Covid hit, but freight revenues fell by 44% in the second quarter.

”We have been expecting to come to these days,” says Seker. ”Cargo had a very strong two years… and we are seeing the normalisation. The yields dropped by about 35%. Overall we expect to finish this year [with an] about 25-30% drop in cargo yield terms… and probably a very low single-digit figure drop in terms of tonnes carried.”

That was compounded by the deployment of much of its cargo capacity during April and May to support the relief efforts which followed the devastating February earthquake which hit Turkey and Syria. This contributed to the bulk of the one-off impacts incurred so far this year, but Seker does not expect any major effects over the second half..

“So that also played a role in the decline of total revenue observed,” he says. ”But still, compared to our peers, Turkish Cargo is showing a very strong performance and we are optimistic by the last quarter of this year, when the cargo high season starts, we will be able to see some recovery in cargo operations.

”Going forward we keep investing in cargo. We’ve got two wet-lease cargo freighters this year, which wasn’t in the plan, and we increased the cargo fleet to 24 aircraft and we are looking into new cargo aircraft for our coming year demand,” he adds.

Updated to correct second quarter load factor to 81.7%