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DALLAS — Turkish Airlines (TK) reported revenue improvements in a recently released report on 2022 earnings and maintained positive projections for 2023 growth amid earthquake recovery efforts.
Airways tuned into the March 2 earnings conference, where TK Chairman Prof. Dr. Amhet Bolat and CFO Assoc. Prof. Dr. Murat Şeker outlined the financial status of the airline coming out of 2022 along with an array of projections for the upcoming year.
TK managed to fully escape from the financial grasp of the COVID-19 pandemic, reporting strong gains in total, passenger, and cargo revenues in comparison with pre-pandemic levels in 2019.
Specifically, the airline pulled in US$18.4bn in total revenues versus US$13.2bn in 2019, with strong growth expected throughout 2023 even as the airline participates in relief efforts in response to the devastating February 2023 earthquakes in southern Türkiye and northern Syria.
A Growing Cargo Business, Enhanced Financial Position
Although passenger operations are set to remain the backbone of the TK operation, the conference highlighted the growing role of cargo operations as a source of revenue for the airline. Compared to 12.8% in 2019, cargo operations accounted for 20.3% of all TK revenues in 2022 as the airline gained an increased market share.
In 2022, the airline also provided the highest international seat capacity across all global network carriers while maintaining a relatively balanced cost base. Dr. Bolat attributed the lower cost base to the continual operational investments made by TK throughout the pandemic.
Geographically, the strongest passenger rebounds for TK came in South America, North America, Europe, and Africa with a level of the total recovery in comparison with 2019.
In terms of leverage, the airline managed to reduce total debts by USD $5.4 billion since the end of 2020. TK finished 2022 with USD $4.7 billion in liquidity.
International Connectivity, a Cornerstone of Growth
A broad and robust route network in conjunction with the massive Istanbul Airport (IST) hub underpins the success of TK as a source of international connectivity. At the end of 2022, the airline served 342 destinations across 129 countries.
Specifically, the airline began flying to Seattle (SEA) in the U.S., Cebu (CEB) in the Philippines, Bukhara (BHK) in Uzbekistan, Turkmenbashi (KRW) in Turkmenistan, Milan Bergamo (BGY) in Italy, Juba (JUB) in South Sudan, Kirkuk (KIK) in Iraq, and Tivat (TIV) in Montenegro during 2022.
Dr. Bolat in a 2022 interview with Airways highlighted the ambitions of the airline to potentially begin serving Denver (DEN) and Detroit (DTW), expanding their reach in the U.S.
Beyond the role of IST as an international hub, TK seeks to utilize tourism to Türkiye, particularly from the U.S., as a pathway to enhanced growth. In 2022, executives from the airline toured U.S. cities like Miami (MIA) and New York City (JFK) to drum up coverage from local media and support from travel agencies.
The airline is also partnering with Turkish medical providers in the form of a new "Heal in Türkiye" program, utilizing medical tourism as a path towards growth not only for TK but the Anatolian nation as a whole.
AnadoluJet, a Beacon for European and Middle Eastern Growth
AnadoluJet, a TK regional brand, captured a major increase in international passenger capacity. It went from a 13.3% share of international capacity in 2019 to a 64.5% share in 2022.
In terms of load factor, the brand went from a load factor of 87.5% in 2019 to 82.9% in 2022. Nonetheless, the 2022 load factor still represents an improvement from pandemic levels. Going forward into 2023, AnadoluJet expects to add an additional 15 new generation aircraft while increasing service to customers, including those who are price-sensitive, across Europe, the Middle East, and Central Asia.
Earthquake Recovery, 2023 Expansion
Responding a question on the impact of the February 2023 earthquake on passenger traffic, Dr. Şeker noted that "we have not seen a significant, actually at all, we have not seen a deterioration in forward bookings regarding both before and after the earthquake."
The TK CFO continued, saying that there "was of course, as expected, a significant drop in domestic travel but as the earthquake happened through the month of February it was not a big disruption in our projections."
"On the international to domestic or international to international air travel, we did not see any significant change after the earthquake," Dr. Şeker added.
The airline contributed heavily to relief efforts after the earthquake, flying rescue dogs from around the world into Türkiye to participate in rescue activities.
2023 Outlook
The carrier expects 2023 passenger capacity to grow by 10% to 20% provided, as Dr. Şeker noted, that the airline receives the 33 aircraft expected to be delivered over the course of the year on time.
Responding to an Airways question about the position of TK in the Indian market, Dr. Şeker described a current partnership with IndiGo (6E) as a "small operation with one narrowbody and one widebody aircraft" serving New Delhi (DEL) and Mumbai (BOM).
Dr. Şeker said that in 2022 "after the Indian market opened towards the beginning of the first quarter, we started to generate a small profit margin, and especially during the last quarter of 2022, we generated an amount of revenue well above our budget," adding that "our competitors have restarted to increase frequencies so we are expecting higher competition but that comes with the higher demand environment and we expect to benefit from that market environment."
As a truly international airline, TK heads into 2023 focused on the maintenance of a low cost base combined with the sustainable capture of growth opportunities and increased global connectivity via IST.
Featured image: Turkish Airlines Airbus A330-203 registered as TC-JNC and painted with a retro livery. Photo: Alberto Cucini/Airways
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