Turkish sees 2Q net profit decline on new airport move, MAX grounding

Turkish Airlines reported a 2019 second-quarter net income of $26 million, down 79.5% from a net profit of $127 million in the year-ago period.

Operating profit for the quarter dropped 96% to $10 million from $267 million in 2Q 2018.

The Turkish flag carrier primarily attributed the 2Q loss to decreasing domestic demand, the move to the new Istanbul airport, the Boeing 737 MAX fleet grounding, and Airbus A320neo delayed deliveries, which limited revenue growth.

The Istanbul-based carrier said revenue was slightly down 0.1% for the quarter to $3.2 billion from $3.17 billion year-over-year (YOY).

The move to the new Istanbul Airport in the first weeks of the second quarter caused numerous flight cancellations.

Turkish Airlines chairman Ilker Ayci said, “Overall, we cut about 5,000 frequencies just in the month of April, which is travel-wise a busy month.”

Second-quarter EBITDAR stood at $561 million, down 25.2% YOY; the 2Q EBITDAR margin was down 6 points to 17.6% The depression of the EBITDAR margin was mainly caused by higher fuel and personnel expenses.

Fuel costs rose 6.6% to $981 million in the second quarter.

The Istanbul-based carrier posted a first-half loss of $203 million, reversed from a 1H net profit of $41 million.

Between January and July, ASKs grew 0.7% YOY to 88.8 billion, while RPKs were up 0.4% to 71.2 billion. This equated to a load factor of 80.1%, down from 80.4% for the year-ago period; the number of passengers dropped 1.7% to 35.1 million, during the first half.

Turkish Airlines said it received 10 new-generation narrowbody and one widebody aircraft in the first half of this year. “These aircraft consist of five neos and five [Boeing] 737 MAXs … Unfortunately, we had to ground the MAX fleet since about mid-March. For the time being, we don’t have a clear timeline regarding the reintroduction date of the MAX aircraft,” Ayci said. Delivery of six A321neos, which had been planned for delivery in 2019, have been postponed to 2020.

As of June 30, Turkish Airlines operated a total of 338 aircraft, comprising 224 narrowbody, 91 widebody and 23 cargo aircraft. The carrier aims to add more than 200 new-generation aircraft through 2023.

“For the full-year guidance, we expect to be able to fulfill our guidance of 22% to 24% EBITDAR margin,” Ayci said.