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UPDATE – After only one loss-making year during the pandemic, Turkish Airlines has swung back to profitability in 2021. The carrier reported a profit of $959 million compared to an $836 million loss in 2020. Last year’s result is even better than that of 2019 when Turkish posted a $788 million profit. The airline published its financial statements on March 1. Turkish Airlines swings back into profit after one year in red.
Last year’s operating profit was $1.414 billion versus $-255 million and $876 million in 2019. Total revenues were $10.686 billion, up from $6.734 billion. Passenger revenues were $6.390 billion versus $3.792 billion. Expenses were $8.322 billion, up from $6.378 billion, with fuel and ground services the main reason behind the increase. At $389 million, net cash from operations was significantly lower than the $2.111 billion in 2020.
In the final quarter, Turkish produced a $619 million operating profit with revenues of $3.3 billion. Domestic capacity was at ninety percent of 2019 levels and international at 83 percent. Passenger numbers were at 81 percent of pre-crisis levels and 74 percent on international routes. Omicron affected demand, but Turkish was able to keep numbers up with “flexible and effective capacity management.” Interestingly, Asia and the Far East contributed the most by total revenues, ahead of Europe and the Americas.
Cargo revenues grew by 47 percent to $4.015 billion. The carrier operated at full capacity with roughly two-thirds of its revenues ($2.843 billion) earned by its fleet of twenty full-freighters and the remainder by fifteen passenger widebodies. As passenger services recovered, so did belly capacity. Cargo tonnes increased to 1.9 million from 1.5 million in 2019, which helped increased the market share of Turkish from 4.7 to 5.2 percent.
Cost control was key in 2021 and Turkish Airlines reduced its spending by $700 million and negotiated deferral of aircraft deliveries. Cash and cash equivalents stood at $2.7 billion. Net debt was down to $12.365 billion from $14.924 billion. It repaid $3.1 billion in commercial loans. The airline has $3.0 billion in undrawn credit facilities.
Turkish Airlines’ path to recovery has been going up in 2021. (Turkish Airlines)
Turkish Airlines and its subsidiaries have a fleet of 370 aircraft, of which currently 272 are active with the main carrier. In 2021, it took delivery of eight Boeing MAX 8s, four MAX 9s, six Airbus A321neo’s, three Airbus A350-900s, and one Boeing 787-9. This was a rare June delivery of an aircraft that had been fully reworked and was handed over after Boeing paused Dreamliner deliveries in May.
In its outlook for 2022, Turkish Airlines says that it expects to operate close to 2019 capacity levels and return its costs per available seat kilometer (CASK) excluding fuel also to that of 2019. Maintaining low unit costs is one of the priorities, as is deleveraging and strengthening liquidity. The airline has hedged its fuel this year by 45 percent. Growth options should present themselves with the cargo business and with subsidiary AnadoluJet, which already in 2021 grew its presence in the leisure market.
