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Turkish Airlines’ budget carrier, cargo service to continue as separate firms

by DAILY SABAH

ISTANBUL Jan 31, 2021 - 3:53 pm GMT+3
A Turkish Cargo plane carrying China's Sinovac COVID-19 vaccines in active temperature control containers is seen on the tarmac of Atatürk Airport before departing to Brazil, in Istanbul, Turkey, Nov. 18, 2020. (Reuters Photo)
A Turkish Cargo plane carrying China's Sinovac COVID-19 vaccines in active temperature control containers is seen on the tarmac of Atatürk Airport before departing to Brazil, in Istanbul, Turkey, Nov. 18, 2020. (Reuters Photo)
by DAILY SABAH Jan 31, 2021 3:53 pm

In a major shift, Turkey’s flag carrier Turkish Airlines (THY) is about to enter a new phase as its two subsidiaries, a budget carrier and an air freight transporter, are set to continue operations as separate companies, according to the THY CEO. The airline has also established a technology company.

“THY Cargo is becoming a completely separate company. We plan to incorporate AnadoluJet. We are flying these companies to grow faster, pave the way for potential partnerships and acquisitions in the future,” Ilker Aycı told reporters Friday as he evaluated the coronavirus pandemic ravaged-2020 and plans for 2021.

“We will have wings flying separately. This is a new era for THY,” Aycı stressed. “New partnerships and acquisitions will not come as a surprise. We are already getting partnership offers.”

The CEO said they would decide on the matter of the companies’ initial public offerings (IPO) “on the way.”

The airline industry suffered an unprecedented year in 2020 amid rolling global travel restrictions that brought the movement to a near standstill.

Yet, Turkish Airlines’ air cargo brand, Turkish Cargo, emerged as a bright spot as one of the fastest-growing air cargo brands, maintaining operations relentlessly in order not to disrupt the global pharmaceutical supply chain. It was named Europe’s best air cargo brand at the 2020 Air Cargo News Awards in November.

To gain ground at a time when most air passenger operations had ground to a halt, the company turned its passenger aircraft into cargo planes. It delivered everything from food, aid materials, medicine, masks and medical equipment worldwide.

According to the International Air Transport Association (IATA) data, Turkish Cargo managed to rack up a 0.4% rise in air cargo from January 2020 to October 2020, while the global market volume nosedived by 20.8%.

Turkish Cargo’s market share climbed to 4.7% in the 10-month period, from 4.1% in January, rising to sixth place in 2020, up from eighth in the January-October 2019 period.

According to figures from World Air Cargo Data (WACD), Turkish Cargo’s income market share grew to 5.3% in January-November, up from 4.6% at the beginning of last year.

Aycı also said THY managed to rank sixth in cargo transport in the world in 2020. It ranked third in medical equipment transport, he added.

“In response to the increasing demand, we have turned the crisis into an opportunity and put 25 cargo aircraft as well as 50 passenger aircraft into operation for freight transport. We also took advantage of our extensive flight network,” he noted.

Having the world’s largest direct cargo plane network, Turkish Cargo reaches more than 300 destinations, 95 of which are direct cargo.

The flag carrier subsidiary transported one out of every 20 air cargoes delivered around the world in 2020, said Aycı. It aims to enter the top three in the world by 2023 as it looks to transport one out of every 10 cargoes in the world.

Carrier with least damage

Aycı said the aviation industry has left what he said was the worst year in the industry’s history, pushing the sector back 20 years.

“THY has been an airline company that overcame 2020 with the least damage,” he said.

The airline posted a net loss of TL 946 million in the third quarter, compared with a profit of TL 3.71 billion a year ago.

Analysts expected the company to log a net loss of TL 1.42 billion for the period in question.

According to analysts, deferred tax revenues and grant loan revenues related to increased aircraft and engine purchases were effective in the loss that was below expectations.

Aycı said the new financial data they will be announcing in March would indicate that the company had a better year than its peers.

He stressed they particularly managed their cash flow well, noting that they ended 2020 with a cash level near to the one before the 2020 crisis. Ayci pointed out that positive results would come, especially in the main activity figures.

The CEO said many airlines saw up to a 50% drop in value due to the pandemic, stressing this figure in Turkish Airlines remained at around 10%.

Turkish Airlines was again named Turkey’s most valuable brand in 2020 with a value of nearly $2 billion, according to the leading London-based independent branded business valuation consultancy, Brand Finance.

Aycı emphasized that the carrier looks to play an important role in vaccine transportation this year. He said the company aims to take advantage of being the company flying to the most destinations and gain an important share of global vaccine transport.

According to the CEO, the company is flying all of the vaccines developed so far, including BioNTech's COVID-19 vaccine.

“These vaccines have their own packaging and are given to us in special containers. We have the necessary software infrastructure for these transports,” Aycı noted.

Aycı also hopes for recovery on the tourism side as he said the fact that Turkey has a strong health infrastructure will provide an advantage this year.

“The rate of spread of the virus is faster than the vaccine. The mutated virus has also raised concerns. Many European countries, which are popular in tourism, plan not to let in unvaccinated tourists. Because the health infrastructure in these countries is not strong. Some countries are even considering not opening the season this year,” Aycı explained

“Turkey’s health infrastructure is very strong. So, we are trying to get the greatest share in tourism.”

New firm to sell technology to the world

Acyı said they have established a technology company, through which it looks to sell technology to the world.

Ali Serdar Yakut, who will be leading the THY Technology and IT Inc., said they would be manufacturing more technology in the field of cargo and logistics and sell those products to the world.

“There are several large companies that offer technology to the aerospace industry. We found that they manipulate us about the price because they were few in number. So, we turned the crisis into an opportunity,” Yakut noted.

He stressed their technology investments have had a significant impact on THY’s cargo growth.

“We are going to sell the technologies that we were purchasing from outside before. We aim to be one of the largest technology companies in aviation,” Yakut said.

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