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Turkish airlines show signs of recovery in latest financials

The two largest Turkish airlines have reported improving financial results for the quarter ended 30 June as they work to recover from the impact of their home country's recent geopolitical and security uncertainties.

The performance must be seen in the context of a relatively weak second quarter in 2016, when the country was reeling from a series of terror attacks and geopolitical turmoil in the lead-up to the failed coup in July of that year.

During this year's second quarter, there were signs that Turkey was recovering some of the suppressed inbound demand, declines in which had affected leisure markets particularly badly.

Turkish Airlines swung to an operating profit before investments of $189 million for the period, from a loss of $197 million in the second quarter of last year, it said on 11 August. It did not provide any commentary on its results.

The flag carrier's revenue grew to $2.6 billion from $2.4 billion, while it managed to cut its cost of sales slightly to $2.1 billion.

Revenue was up by nearly $200 million for international flights, but the domestic figure dipped by $12 million.

Turkish still reported a net loss of $61 million, however, as "financial expenses" more than doubled year-on-year, to $397 million, mainly due to a much higher adverse currency impact for the period, as the Turkish lira continued its long-term slump against the US dollar.

Low-cost operator Pegasus, which is in the middle of a transformation programme dubbed "3C", increased its EBITDAR to TL260 million ($74 million) for the second quarter, from TL43 million a year earlier, it disclosed today.

Its revenue more than doubled to TL1.2 billion, on a combination of RASK improvements, higher passenger volumes and some positive currency impacts.

Pegasus says it is continuing to work on a currency hedging programme to offset its exposure to the weak Turkish lira.

Domestic yield was up 19% year-on-year, while international yield increased 9%.

The budget airline increased its guidance on EBITDAR for the full year to 21-22% as domestic yields proved stronger than expected amid "stabilised" demand.

"For the first time since July 2015, the change in the number of foreigners visiting Turkey turn into positive in the second quarter of 2017," Pegasus states in an earnings presentation.

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