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FINANCIAL DATA

> January June 2010

OPERATIONAL DATA
> January June 2010

Disclaimer
This presentation is confidential and does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of Turkish Airlines A.O (the Company) or any member of its group nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or any member of its group nor shall it or any part of it form the basis of or be relied on in connection with any contract, investment decision or commitment whatsoever. This presentation has been made to you solely for your information and background and is subject to amendment. This presentation (or any part of it) may not be reproduced or redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person (excluding the relevant persons professional advisers) or published in whole or in part for any purpose without the prior written consent of the Company. This presentation includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding the Companys intentions, beliefs or current expectations concerning, among other things, the Companys results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties set forth in the Companys Offering Memorandum, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Companys results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The Company does not undertake any obligation to review or confirm analyst expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.

02.09.2010

Speakers
Temel KOTL, Ph.D.
CEO, Turkish Airlines
Started his Turkish Airlines career in March 2003 as Executive Vice

President (Technical) and was appointed as CEO in April 2005


Ph.D. in Mechanical Engineering University of Michigan, USA M.Sc. in Mechanical Engineering University of Michigan, USA M.Sc. in Aerospace Engineering University of Michigan, USA B.Sc. in Aerospace Engineering, Istanbul Technical University, Istanbul Board Member of IATA, Turkish Airlines Inc, Turkish Airlines Technical

Inc.
Chairman of the Board of Sun Express Inc.

Speakers
COKUN KILI,
CFO, Turkish Airlines
CFO as of March 2006
M.Sc. in Finance, Urbana Champaign Illinois University, USA M.A. Economics, Ankara University Certified Public Accountant

Board Member of Sun Express


Board Member of THY Opet Havaclk Yaktlar A.S. Auditor of THY Technic A.S.

5
10,0 20,0 30,0 40,0 -10,0 0,0 20,0 40,0 60,0 80,0 -20,0 0,0
Source: AEA

Total

%Change

TK 12,9 2007 28,7 AEA 4,1 4,2 5,1 2007 AEA TK TK 2008 2008 AEA AEA TK TK 2009 2009 AEA TK AEA 0,0 TK AEA 4,2 0,7 3,1 TK 5,0 4,9 1,9 2008 2009 Jan-June'10 AEA 1,0 3,5 0,4 TK 22,9 28,3 22,4 AEA -6,0 -5,5 -5,9 TK 12,4 AEA 22,0 30,9 1,3 -5,2 0,9 8,3 -0,9 3,5 -20,0 20,0 40,0 14,4 22,1 19,2 20,8 26,3 28,5 2007 7,6 12,6 6,1 Jan-June'10 -20,0 Jan-June'10 26,6 35,3 29,9 AEA TK AEA 0,0 TK 11,5 9,4 8,3 -1,7 3,0 1,2 12,3 24,3 19,7 -5,8 -4,2 -4,5 18,7 19,7 25,9 -0,3 -3,4 0,6 20,0 54,8 55,2 61,1 15,5 11,6 13,8 16,5 7,7 2007 AEA 5,7 6,6 7,0 TK 17,5 11,0 15,8 2008 AEA 0,6 3,4 2,0 13,1 TK 18,6 13,3 2009 AEA -6,1 -5,2 -5,3 11,0 13,3 TK Jan-June'10 10,9 AEA -0,6 -3,7 -0,5 14,6 10,0 4,4 9,5

Middle East

THY vs AEA

30,7 TK
PAX ASK RPK

15,6 11,9 19,0

Europe
40,0

Far East

Destinations: 127 International Lines


AMERICAS (4)
CHICAGO NEW YORK SAO PAULO WASHINGTON D.C. LOS ANGELES

EUROPE (70)
GERMANY (9)
BERLIN STUTTGART DUSSELDORF FRANKFURT HAMBURG HANNOVER COLOGNE MUNICH NUREMBERG

FAR EAST (18)


ALMATY ASKGABAD ASTANA BANGKOK BEIJING BISHKEK DUSHANBE HONG KONG JAKARTA KARACHI MUMBAI NEW DELHI SHANGHAI SEOUL SINGAPORE TASHKENT TOKYO OSAKA

UKRAINE (6)
ODESSA KIEV SIMFEROPOL DONETSK DNEPROPETROVSK LVOV

U.K. (3)
LONDON MANCHESTER BIRMINGHAM

FRANCE (3)
PARIS NICE LYON

CANADA (1)
TORONTO

SWITZERLAND (3)
BASEL ZURICH GENEVA

ITALY (4)
MILAN ROME VENICE BOLOGNA

AFRICA (16)
ADISABABA ALGIERS BENGHAZI CAIRO CAPETOWN CASABLANCA DAKAR KHARTOUM JOHANNESBURG LAGOS NAIROBI TRIPOLI TUNUS ALEXANDRIA DAR ES SALAAM ENTEBBE ACCRA ORAN

HO-CHI-MINH MIDDLE EAST (19)


ABU DHABI ALEPPO AMMAN BAGHDAD BAHRAIN BEIRUT DAMASCUS DOHA DUBAI JEDDAH KUWAIT MASHAD MADINAH MUSCAT RIYADH SANAA TABRIZ TEHRAN TEL AVIV

SPAIN (2)
BARCELONA MADRID

RUSSIA (7)
MOSCOW ROSTOV KAZAN ST.PETERSBURG YEKATERINBURG UFA SOCHI NOVOSIBIRSK
AMSTERDAM ATHENS BAKU

OTHERS (30)
BUCHAREST BUDAPEST CHISINAOU COPENHAGEN DUBLIN GOTEBORG HELSINKI LEFKOSE LISBON LJUBLIANA MINSK OSLO PRAG RIGA PRISTINA SARAJEVO SKOPJE SOFIA STOCKHOLM TBILISI TIRANA VIENNA ZAGREB WARSAW NAXCIVAN

BASRA ERBIL SHIRAZ

PODGORICA

Planning for 2010

BATUM BELGRAD BRUSSELS

Destinations: 39 Domestic Lines

ORLU STANBUL

SNOP

STANBUL

SAMSUN
MERZFON TRABZON ERZURUM SVAS ERZNCAN MU ARI KARS

ANAKKALE
BALIKESR

BURSA
ESKEHR ANKARA

UAK ZMR DENZL BODRUM DALAMAN ANTALYA ISPARTA KONYA

NEVEHR KAYSER K.MARA ADIYAMAN ADANA G.ANTEP MALATYA

ELAZI DYARBAKIR BATMAN MARDN

VAN

.URFA

HATAY

Network Mapping
Weekly Frequency

6.000

31.1 mn pax

5.000

25.1 mn pax
22.6 mn pax

2010F - 153 Aircraft

4.000
19.6 mn pax 16.9 mn pax 2008 - 127

2009 - 132

3.000

14.1 mn pax 11.9 mn pax 2005- 83

2007 - 101 2006- 103

2.000

2004-73 2003- 65 10.4 mn pax

1.000 90
8

Destination

100

110

120

130

140

150

160

170

180

Passenger Traffic
Domestic
ASK RPK L/F (%)

International

ASK

RPK

L/F (%)

10
73,6

73,2

73,0

75,6

75,4

75,1

76,1

80 70

50 40
(Billion)

71,1

72,6 67,7

73,6

70,1

71,3
66,8 47,5

80 70 60

(Billion)

8,5

9,0

8,1

5
7,1 5,5 4,0 5,2

60 (%)
5,0 3,8 4,2 3,1

30
37,9 27,8 33,5 24,3 29,8 20,2 33,3

5,9

6,4

6,8

24,3 17,3

10 0

0
2005 2006 2007 2008 2009 1H'09 1H'10

40

21,2 14,1

50

25,4 18,1 1H'10 7,0 1H'10

2005

2006

2007

2008

2009

1H'09

Domestic Passengers (mn)

15 10

15
11,1 11,7 20% 5,4

International Passengers (mn) 13,4 11,5 9,7 19% 5,9

8,9 7,2

10,0

10
6,4 6,9

8,0

5 0
2005 9 2006 2007 2008 2009

0
1H'09 1H'10 2005 2006 2007 2008 2009 1H'09

(%) 50 40

20

Passenger Traffic
Capacity-Traffic Development Load Factor %
ASK RPK L/F %

60 50 40 (Billion)
71,5 68,7

72,7

73,9 70,9 68,1

80
72,1

THY Passenger Traffic 1H2009 vs 1H2010 Landing ASK up by 16.5% up by 19.9% up by 26.8% up by 19.3% up by 4.0 points

70
60

57

30 37 34 20 42 46

RPK Passenger # ('000) L/F

40

30

25

30

25

30

0
2005 2006 2007 2008 2009 1H'09 1H'10

17

10

21

22

10

(%) 50 40

Revenues and Expenses


Total Revenues (Mn)
Other International Domestic

Total Expenses (Mn)


Other Personnel Fuel

3.500 3.000 2.500 2.000 1.500


251 1.814 1.208 1.468

3,228 2,734 373 2,247 1,860 308


321

3,271
369

3.000 +% 32 1,857 2.500 2.000 2,199 2,449

2,837

2,885

1,804
1.132 928 452 614

1.240 1.216 622

1.518

+% 36 1,800 1,323
891 406

2.177 2.266

1,407
178 950

232

1.500
1.000 500

1.000
500 0

1.276

572
661 976

656
711

719 316 288 502

436 441

401

471

598

679

636

279

349

2005 2006 2007 2008 2009 1H'09 1H'10

2005

2006

2007

2008

2009 1H'09 1H'10

Source: Financial statements released under Turkish CMB standards, converted to Euro using average exchange rates

Able to Sustain Revenue Growth While Increasing Capacity


11

Revenues- (1H 10)


Revenues Split Cargo 7,8% Pax Revenue 87,5% Charter 4,0% Passenger Revenues Split by Geography Domestic 21% Far East 18% M. East 13% Africa 6% Other 0,7% Europe 35% America 6%

Source: Financial statements released under Turkish CMB standards, converted to Euro using average exchange rates

Passenger Revenue from Middle East and Africa regions are increasing
12

Passenger Breakdown- (Jan-June10)


Intl. Traffic Breakdown by Geography Market Shares
International

Far East; 28,3%

Middle East; 12,3%

THY 60% Foreign Carriers 31%


Domestic

Other Turkish Carriers 9%

Europe; 46,2%

America; 10,9%
Africa; 2,1% Other Turkish Carriers 36%

THY 64%

Increasing Market Share in International Traffic


13

Market Share
THY Market Share Among AEA Airlines (January-December)
ASK % RPK % PAX %

10%
8,21%

8%
6,14%

7,53% 6,26% 5,56% 5,91% 5,22%

6%
4,78% 4,15%

5,24% 3,65% 3,31% 3,90% 3,69%

THY ranks fourth in passenger market share, fifth in ASK and sixth in RPK market share among AEA member airlines

4,22%
4,14%

4%
2% 0%

3,05% 2,91%

2005

2006

2007

2008

2009

1H'10

Source: AEA

14

Transfer Passengers
Intl to Intl Transfer Passengers (2005 2009)
5.000.000 4.500.000 4.000.000 3.500.000 3.000.000 2.500.000 2.000.000 1.500.000 1.000.000 500.000 0 2005 2006 2007 2008 2009 1H'09 1H'10
1.133.527

THY carried total of 4.716.318

42% 40% 43% 38%


1.563.254 2.228.814 3.128.895

4.445.167

26%
2.313.180 1.841.114

transfer passengers during JanJune 2010, with an increase of 16.0% compared to the same period of 2009.
Total transfer passengers

accounted for 35.9% of the passenger traffic.


Intl to intl transfer passengers

share in total transfer passengers is 49.0%. During Jan-June 2010, intt to intl passengers increased by 26.0% reaching to 2.313.180

Significant increase in Intl to Intl Transfer Passengers

15

Fleet Development
Fleet as of 18th August 2010
Type A330-200 Wide Body A340 14% B777-3ER Total B737-800 B737-700 B737-400 Narrow Body A320 83% A321 A319 Total Cargo A310 TOTAL % Total 7 9 4 20 52 14 2 25 21 4 118 4 142 Financial Operational Seat Owned Lease Lease Capacity 5 2 1.812 7 2 2.446 4 1.248 7 5 8 5.506 38 13 8.596 14 1.986 2 300 12 13 3.962 15 6 4.022 4 528 0 65 53 19.394 3 1 10 7% 70 49% 62 44% 24.900 Fleet Age 5,34 13,78 3,03 8,68 7,04 4,3 18,5 3,3 4,3 4,5 5,55 22,16 6,46 As of 18th August 2010, total fleet reached

to 142, with an average age of 6,46 years.


Seat capacity increased by 8,7% during

Jan-July 2010 compared to the same period of 2009.

* 2 wet-lease aircaft is not included.

16

Fleet Development
Fleet Additions of 105 Aircraft Type B777-3ER A330-300 Total B737-900ER B737-800 Narrow Body B737-700 B737-400 A321-200 A319-100 2010 5 4 9 2011 7 3 10 2 2 8 6 2012 3 3 4 5 6 2013 0 2 2 2014 0 2 1 TOTAL 12 10 22 10 10 0 0 14 6
According to the Fleet Plan for 2009-2023,

Wide Body

decision was made to purchase total of 105 aircraft:


WB Long-Haul: 25 firm/10 optional = 35 12/ B777-300ER and 10/A330

ordered,13 left to be decided.


NB Medium-Haul:50 firm/20 optional = 70 Firm order of;14/A321-200; 6/A319-100;

Total
TOTAL Optional Cargo TOTAL A319/A321 B737-800/900ER Total A330-200F

0 9

18 28

15 18

4 4

3 3

40 62
10 15 25 2 89

10/ B737-800 and 10/ B737-900 ER Optional order of 10 A319/A321 and 15/ B737-800/900ER. 5 left to be decided.
Total PDP payment for firm orders will be

1 10

1 29

18

approximately around 1.66 bn$ for the firm orders. Including the options this a mount will be 2.7 bn $

Year End* Fleet & Seat Capacity After Additions & Exits 2010 2011 2012 2013 2014 Fleet* 153 175 186 185 182 Seat Capacity 27.891 31.995 34.215 34.275 33.883
* Includes operational lease aircraft which are not included in the Fleet Plan of 105 aircraft.

17

Operating Efficiency
16.000 12.000 12.951

Number of Personnel*
15.269 14.072 14.672

8,6% 15.934
THY enjoys high personnel

8.000
4.000

11.121

12.807

efficiency compared to its competitors.


Personnel cost of THY per

2005
* THY Technic Personnel is included.

2006

2007

2008

2009

1H'09

1H'10

ASK was only 1.26 cents for the first half of 2010.
Aircraft utilization has been

1.700 1.200 1.271

Passenger per Employee


1.516 1.606 1.644 10% 766 1H'09 841

700 200

2005

2006

2007

2008

2009

1H'10

16,0 14,0 12,0


12,38

Average Daily Flight Utilization (hrs)


WB Long-Haul NB Medium Haul

rising in recent years due to better fleet composition and a more dynamic scheduling process. As of June 2010, the utilization increase in wide body and narrow body aircraft was 28% and 16%, respectively.

1.323

10,18

10,32

11,40

8,0
18

2005

2006

2007

2008

2009

1H'09

10,36

11,00

11,32

11,05

10,0

Personnel efficiency is the key driven while increasing fleet size

13,26

12,31

12,49

14,16

11,47

1H'10

12,01

Operating Expenses
Total Expenses
( Mn) Fuel Personnel Sales and Marketing Rents Landing Ground handling Passenger Catering Depreciation Maintenance Others General Administration Insurance TOTAL Op.Cost per ASK ( ) 1H'09 288 316 117 125 120 83 75 81 82 14 12 11 1.323 5,23 % in Total 22% 24% 9% 9% 9% 6% 6% 6% 6% 1% 1% 1% 1H'10 502 406 153 139 144 112 99 91 104 24 16 9 1.800 5,93 % in Total 28% 23% 9% 8% 8% 6% 6% 5% 6% 1% 1% 1% 10/'09 % 74% 28% 31% 12% 20% 36% 33% 12% 26% 72% 30% -16% 36% 13%

Total expenses increased by 36%, mainly due to increasing fuel costs.

19

Operating Expenses-Unit Cost


Cost Per ASK ( cent) 1H10
CASK Personel/ASK Fuel/ASK

Change in CASK( cent) 1Q10

8,0 6,0 4,0


2,11 6,05 5,95 5,71 6,12 5,10 5,93

20% 10% 0%
2006
1,26 1,34 1,16 1,56 1,26 1,47 1,45 1,66 1,22 1,59 1,37

Domestic

International

Total

1%

7% 6% 4%

5%5% 3%

2,0 -

-10% -20%

-5% -5% -6%

2007 -5%
-6%

2008

2009
-16% -16% -16%

1Q'10

2005

2006

2007

2008

2009

1H'10

Source: Financial statements released under Turkish CMB standards, converted to Euro using average exchange rates

20

Peer Group vs THY


Operating Costs per ASK ( Cent)-1H10
15
11,7 12,5 9,7 9,6 8,1 7,8 7,6 7,3 6,2 6,0 5,9 10,5 8,5 6,5
11,72 9,72 9,62 8,07 7,84 7,62 7,33 6,18 6,02 5,93

Cost Per ASK ( Cent)-1H10


CASK Personel/ASK Fuel/ASK

10 5 0

4,5
2,5 0,5

4,39 3,09 2,91 1,91 2,38 2,21 1,75 2,15 1,88 2,22 1,46 2,14 0,84 1,99 1,26

1,67 1,67 2,25

SAS AF* LH
*April10-June10 (Q 10 Results )

AY

IB

BA* LAN CA SQ* TK

SAS AF*

LH

AY

IB

BA* LAN

CA

SQ

0,841,56

TK

P.S. LH (Group 12.9cent) and SQ (Group 7.3cent) are based on airline business only. Others based on Group financials.

THY is the most cost efficient among its European Peers


21

Financial Highlights
Change in R/Y ( cent) 1Q10
Domestic International Total

Change in RASK ( cent) 1Q10


20%

20%

Domestic

International

Total

10%
5% 2%

8%

10%
6%

10% 7% 2% 7%

8% 6% 5%

3% 1%

6%

6%

5% 5% -3%

0% 2009
-14% -13%
-16%

0%

2006 2008 1Q'10


-3% -3%

1%

2007

2008

2009
-16% -17% -18%

1Q'10

2006 -10%
-9%

2007

-10% -20%

-6%

-5%

-20%

Source: Financial statements released under Turkish CMB standards, converted to Euro using average exchange rates

22

EBITDAR Margin
EBITDAR Margin % ( 1H10)
30,0 24,8 20,0 17,2 22,5 24,5
Increase in fuel costs had a

negative impact on EBITDAR.


20,6 15,5

16,3

10,0

CAGR (2005-2009): 20,1%

0,0 2005 2006 2007 2008 2009 1H'09 1H'10


* CAGR= Compounded Average Growth Rate

( Euro Mn) Revenue Net Income Net Income Margin (%) EBIT EBIT Margin (%) EBITDA EBITDA Margin (%) EBITDAR EBITDAR Margin (%) EV/EBITDAR (x)

2006 2.247 99 4,4 48 2,1 235 10,5 366 16,3 5,3

2007 2.734 149 5,5 285 10,4 490 17,9 678 24,8 3,3

2008 3.228 598 18,5 391 12,1 541 16,8 727 22,5 3,3

2009 3.271 260 7,9 387 11,8 548 16,8 802 24,5 4,9

1H'09 1.407 48 3,4 84 6,0 165 11,7 290 20,6 11,3

1H'10 1.857 138 7,4 57 3,1 148 8,0 287 15,5 14,1

10/'09 % 32% 190% -4.6 pt -32% -0.3 pt -10% -2.0 pt -1% -3.6 pt 2.8 pt

23

Peer Group vs THY


EBITDAR Margin % Comparison (1H10)
30,0 25,0 20,0 15,0 10,0 5,0
29,8 22,9 22,7 21,2 15,5
THY recorded profit of 138 mn.

in 1H 2010.
8,5
8,3 7,2 5,9 5,5
Compared to its competitors,

3,5

THY has a higher EBITDAR margin.

CA RYR* LAN SQ* TK AF* IB BA* SAS AY LH


P.S. LH (Group 8.2%) and SQ (Group 23%) are based on airline business only. Others based on Group Financials.

* April 10-June 10, 1Q10 Results

( Euro Mn) Revenue Expense Net Income EBIT EBIT Margin (%) EBITDA EBITDA Margin (%) EBITDAR EBITDAR Margin (%)

TK 1857 1800 138 57 3,1% 148 8,0% 287 15,5%

LH 9.567 10.572 -104 -342 -3,6% 175 1,8% 336 3,5%

SAS 2.035 1.960 -127 -164 -8,1% -113 -5,5% 119 5,9%

AF 5.721 5.875 736 -132 -2,3% 267 4,7% 484 8,5%

AY 955 1.007 -50 -40 -4,2% 17 1,8% 53 5,5%

LAN 1.695 1.486 122 209 12,4% 346 20,4% 385 22,7%

IB 2.280 2.327 -21 -50 -3,2% 36 1,6% 190 8,3%

BA 2.388 2.477 -150 -89 -3,7% -89 -3,7% 171 7,2%

CA RYR 4.193 897 3.699 777 568 94 494 119 11,8% 13,3% 977 181 23,3% 20,2% 1250 205 29,8% 22,9%

SQ 1.639 1.559 127 80 4,9% 80 4,9% 347 21,2%

24

Fuel
4,00 3,80 3,60 3,40 3,20 3,00 2,80 2,60 2005 2006 2007 2008 2009 1H'09 1H'10 7.7% reduction since 2005 3,84

Average Specific Fuel Consumption


3,67 3,60 3,55 THY Fleet 1H10 3.0 Litres/100 ASK 3,55 3,46 3,47

THYs fuel expense per ASK

is lower on the average compared to its peer group.


Due to fleet expansion, the

fleet average age will be lower which in return will increase THYs fuel efficiency.
As of June 2010, with the

Fuel Cost Per ASK ( Cent)-1H10


3,0
2,38 2,25 2,22 2,14 2,09 1,99 1,91

1,67

1,67

1,56

help of its young fleet and Fuel Saving Program which started in April 2008, THY saved 11.854 tons of fuel and reduced CO2 Emission by 37.341 tons.

0,0 AF* BA* LAN CA LH SQ* SAS AY IB TK

P.S. LH (Group 2.21) and SQ (Group 2.58) are based on airline business only. Others based on Group Financials.

Fleet expansion will reduce fuel cost as well as fleet age

* April10 June10, 1Q10 Results

Source: Company annual reports & websites.

25

Currency Breakdown
Revenue by Currency (1H10)
Other; 36% USD; 13%
THYs income is diversified

among the major currencies.

TRY; 16%

EURO; 35%

Expenses by Currency (1H10)


Other; 7% USD; 49% TRY; 33%

Currency exposure risk is minimized due to efficient cash management


EURO; 11%

26

Sector Comparison
SCORE RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 COMPANY Trk Hava Yollar A.O. Singapore Airlines Ltd Hawaiian Holdings Inc. Alaska Air Group Inc Copa Lan Airlines SA Cathay Pasific Airways Ltd TAM SA Aer Lingus Group PLc Air New Zeland Ltd Continantal Airlines Inc US Airways Group Inc. Qantas Airways Ltd Thai Airways International Deutsche Lufthansa AG Iberia Lineas Aereas De Espana SA Gol Linhas Aereas Inteligentes SA Sas Ab.Stockholm Air Canada Finnair OYJ UAL Corp EVA Airways Corp Korean Air Lines Co.Ltd All Nippon Airways Co Ltd Ana Delta Air Lines Malaysian Airlines System Berhad British Airways PLC China Airlines Air China Ltd AMR Corp. Air France-KLM Pakistan International Airlines China Southern Airlines Co Ltd Asiana Airline Inc. China Eastern Airlies Corp. Ltd. DATE Dec 09 Mar.10 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Dec 09 Dec 09 Mar 10 Dec 09 Dec 09 Dec 09 Mar 10 Dec 09 Dec 09 Dec 09 Dec 09 FINANCIAL HEALTH 80 69 64 59 59 56 53 49 46 40 39 39 38 38 36 35 34 32 32 31 30 30 29 27 25 24 24 23 23 22 21 16 13 13 1 TOTAL
SCORE
(8)

EARNINGS
LIQUIDITY(14)

FUEL MGT. (14) 31 48 22 25 56 34 45 31 10 15 46 40 35 27 38 13 75 21 22 14 55 1 27 17 53 13 26 26 34 28 38 10 23 8 13

ASSET MGT. (13) 38 33 99 53 51 87 36 38 14 33 50 61 28 34 19 11 52 30 49 22 55 40 27 13 36 39 19 34 1 25 22 50 29 22 27

55 73 56 76 53 59 66 50 47 53 44 37 58 42 56 46 40 55 31 43 42 31 41 44 32 49 39 43 38 32 26 34 21 12 39

48 83 44 61 59 45 51 42 67 66 42 20 78 28 84 85 43 47 37 70 30 12 25 57 29 59 60 28 16 46 48 12 22 15 41

PERF. (15) 32 28 31 70 42 54 50 25 1 18 31 35 21 37 1 1 23 46 1 2 39 57 48 26 15 21 1 75 54 8 1 84 7 1 35

THY ranked No.1 in the financial health* category

* Representing a measure of an airline's overall


financial strength based on assessments of solvency, current ratio, fixed-charge coverage, mix of debt and equity capital, operating income margin and debt service cover.

Source:Aviation Week 2010

Company Overview
Blessed by its prime location,
Turkey only 3hrs flight from 50 different countries Increased focus on transit flights since 2002 Increased focus on Business Class passengers since 2006

Official sponsor of FC Barcelona, Manchester United Football Club & Maroussi Basketball Club, Won award for the Best Airline in Southern Europe and World's Best Economy Class Onboard

Catering at the 2010 World Airline Awards,


Member of Star Alliance, Ranks # 4 among AEA members, by passengers carried, Included in MSCI Indices as of November 2009,

Substantial cost advantage over competitors.

28

January June 2009

January August 2009

Turkish Airlines Inc. Turkish Airlines Inc. Investor Relations Department


Mr. Cokun KILI / CFO
Ms.Suna ELEB/IR Manager

THANKYOU YOU THANK

Tel: CFO Mr.Cokun KILI /+90 212-463-6363/3630

Tel: +90 212-463-6363

E-mail: ir@thy.com

Cargo Transportation
TURKISH CARGO
Turkish Cargo Leading cargo carrier in total export and import

cargo in Turkey.

Operates 22 destinations with its 4 A310-300

freighters besides 158 137 passenger aircraft.

destinations

with

During 1H10 posted revenue was 144 million

Euro, carried cargo was 151,654 tons.

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Cargo Revenue

Cargo Revenue ( Mn)


250 200 150 62%

Cargo revenue has increased by

62% in the first halfof 2010 compared to the same period of 2009.

160

175

179

100 50 0

201

206

2005

2006

2007

2008

2009

1H'09

89

1H'10

144

Plans to Enlarge Freighter Fleet Aiming Higher Cargo Revenues

31

Cargo Transportation

THY - Cargo
250.000
International Domestic

Cargo carried in international

200.000

lines is increasing over the last two years. As of June 2010, 87% of carried cargo was from the international segment.
201.474
114.653 126.492 145.149 161.158 132.070 83.864 30.321
2005

(Tons)

150.000

50%

As of June 2010, THY has

100.000

carried total of 151.654 tons cargo, indicating 50% increase compared to the same period of 2009.

50.000

33.380
2006

39.073
2007

37.732
2008

36.586
2009

17.404
1H'09

19.584
1H'10

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Turkish Cargo vs THY

Turkish Market

THY

THY Market Share

THY, having 57% market

450.000 60% 57% 300.000 48% 382.572 398.480 50% 417.956 55%

80%

60%

(Tons)

44% 331.116 348.722

46%

share in Turkish cargo market by the end of 2009, has increased its market share to 60% as of June 2010.
According to the Fleet Plan,

40%
238.060

246.040

183.052

198.890

182.245

100.284

148.135

150.000

144.974

159.873

20%

0 2005 2006 2007 2008 2009 1H'09 1H'10

0%

decision made to purchase 2 Airbus cargo aircraft A330-200F, which will be received in the year 2010 and 2011.

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THY Academy
THY ACADEMY( To be Established) One of the most outstanding training centers in the Gives training at the areas which are given below: Technic: including Airbus, Boeing and

aviation industry.

RJ70/100 trainings

Has been applying ISO 9001 Quality Management

System since 1998.

Reservation

Gives training services about 10.000 people each year

Ticketing
Cargo Operations Passenger Services Ground Handling Computer Personal Development and Quality

with its trainers, specialized in their areas.

Addresses the training needs of cargo and passenger

agents, universities and other airlines besides Turkish Airlines.

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THY Academy
THY Flight Training Turkey's sole flight training center, certified by Type Rating Turkish Flight Academy Founded on November 2004 as a result of a

Training Organization (TRTO) offers training in line with the standards of JAR-FCL.

need for new flight personnel for THY.

Started training with 16 pilot candidates on

THY not only address airlines within co-partnerships, but

also other airlines.

Turkish Airlines Flight Training Center offers: Cockpit Crew Training Cabin Crew Training Simulators

May 2006. So far, 66 students have graduated from the Academy and started flying at Turkish Airlines.

Currently 51 pilot candidates are given

training at the Academy.


hours ground training.

Giving 210 hours flight training and 1200

5 full flight simulators for RJ-100, B737-400,

B737-800 and A320s aircraft.

A340 Business class, B737 Economy Class

Cabin Service Trainer(CST)B737/A310/A340 Cabin Emergency Evacuation Trainer(CEET)

Ground Training Turkish Flight Academy

2 new simulators (Boeing 777-300ER - A320-A330/340) will be in service as of 2010


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Balance Sheet
Assets (in Mn) Cash and Equivalents Net Trade Receivables Other Current Assets Total Current Assets Net Fixed Assets Other Long Term Assets Total Long Term Assets Total Assets Liabilities (in Mn) Short Term Lease Obligations Accounts Payable Passenger Flight Liabilities Other Current Liabilities Total Current Liabilities Long Term Lease Obligations Retirement Pay Provision Other Long Term Liabilities Total Long Term Liabilities Share Capital* Restatement Effect Restricted Profit Reserves Differences from Currency Translation Cash Flow Hedge Fund Retained Earnings Net Profit For the Year Total Shareholders Equity Total Liabilities & Shareholders Equity 2005 304 121 95 520 1.657 224 1.882 2.402 2005 113 161 149 332 755 540 72 249 861 110 1.180 5 0 0 -596 87 786 2.402 2006 197 135 241 573 1.667 155 1.822 2.395 2006 118 172 174 113 577 780 63 106 949 95 1.010 4 0 0 -336 97 869 2.395 2007 281 144 445 870 1.891 117 2.008 2.878 2007 132 213 222 127 694 918 77 109 1.104 103 1.017 36 0 0 -230 155 1.081 2.878 2008 236 163 825 1.224 2.362 110 2.471 3.695 2008 196 203 228 146 773 1.307 67 154 1.528 82 781 0 2 0 0 530 1.395 3.695 2009 507 206 582 1.296 2.227 445 2.672 3.968 2009 191 260 272 180 902 1.192 70 208 1.471 405 520 11 2 -1 399 259 1.595 3.968 1H'10 328 321 1.255 1.905 2.488 432 2.919 4.824 1H'10 199 320 512 355 1.386 1.187 85 243 1.515 520 585 20 0 -11 592 145 1.923 4.824

In converting the TRY reported results to EURO, year-end EURO exchange rates were used

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Income Statement

Income Statement (in Euro mn)


Operating Revenues Operating Expenses Operating Profit Income From Other Operations Loss From Other Operations Income Before Financial Income/(Expense) Income/Loss due From Asset Valuation Financial Income

2005
1.860 -1.804 56 255 -166 145

2006
2.247 -2.199 48 153 -34 167

2007
2.734 -2.449 285 127 -6 407 9 174

2008
3.228 -2.837 391 30 -111 310 2 753

2009
3.271 -2.885 387 42 -93 337 6 80

1H'09
1.407 -1.323 84 27 -63 47 -1 90

1H'10
1.857 -1.800 57 42 -80 19 -16 212

10/09 %
32% 36% -32% 57% 27% -60% 1083% 134%

Financial Expense
Monetary Gain/(Loss) Income Before Taxation Taxation Net Income

-36
109 -26 83

-62
105 -6 99

-380
209 -59 149

-376
688 -90 598

-80
343 -83 260

-39
97 -50 48

-39
176 -38 138

-1%
81% -23% 190%

In converting the TRY reported results to EURO, the period average EURO exchange rates were used

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Subsidiary & Affiliates


Capital (Mn. ) 154.9 14.6 20.7 9.6 5.4 5.8 5 30 -5 Revenue (Mn. ) 170 78 185 5 Net Income (Mn. ) 11 7 -34 -2

Subsidiaries (1H 2010) THY Technic THY Do&Co Sun Express Air Bosnia THY Opet TGS GOODRICH THY TECHNIC SERVICE CENTER
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Owned 100% 50% 50% 49% 50% 50% 40%

Subsidiaries & Affiliates


TURKISH TECHNIC A.S.
THY Technic A.S.(Consolidated) Owned 100% by THY. During the 1H10, posted revenues and net income was 170 mn and

11 mn respectively.

Provides maintenance services to more than 100 customers, including

international airlines such as Lufthansa, KLM,BA and Alitalia as well as domestic airlines.

Main goal is to become one of the biggest MRO Center in the region.

HABOM (Maintenance Repair & Overhaul Center) Project


HABOM Project will be launched by THY Technic.

Under HABOM, the plan is to increase the airframe maintenance

capacity to approximately 400 aircraft per annum.

Total investment for the project is around 400 mn$ Expected to generate around 6.5 bn$ revenue from 2012 to 2022.

THY will be developing its technical service and maintenance business through the HABOM Project
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Subsidiaries & Affiliates


TURKISH ENGINE CENTER
Turkish Engine Center

In 2008, THY Technic and Pratt & Whitney signed a joint


Owned 51% - 49% by Pratt&Whitney and THY Technic,

venture to establish a new company, Turkish Engine Center. respectively.

Established to provide engine maintenance, repair and

overhaul (MRO) services to customers located in Turkey, surrounding regions and worldwide. engine overhaul facility is planned to be comprised of approximately 25,000 sq. meters located at the Sabiha Gokcen International Airport.

The new environmentally efficient CFM56 and V2500

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Subsidiaries & Affiliates


GOODRICH THY TECHNIC SERVICE CENTER

Goodrich THY Technic Service Center Ltd.


Owned 40% - %60 by THY Technic and TSA-Rina Established to provide the repair and overhaul for

Holdings B.V., subsidiary of Goodrich Corporation. Turkish Airlines and other customers from Turkish domestic market and International Market of Nacelle, Thrust Reverser, and Airframe Components, Which is to establish an overhaul center of excellence and to offer Nacelle, Thrust Reverser and Airframe Component overhaul services of high quality and efficiency available in Istanbul.

Estimated time for start-up business : 1Q 2011

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Components will be repaired/serviced by the company

Subsidiaries & Affiliates

THY DO&CO CATERING A.S.


THY Do & Co Catering A.S. (Equity Pick-up)
Owned 50% - %50 by THY and Do & Co Restaurants

& Catering A.G.

Since 2007, operating nine gourmet kitchens all over

Turkey: Istanbul (Atatrk and Sabiha Gkcen), Ankara, Antalya, Izmir, Bodrum, Trabzon, Dalaman and Adana. Over 60 national and international airlines are catered from these locations. was 78 mn and 7 mn respectively.

During the 1H10, posted revenues and net income

42

Subsidiaries & Affiliates

TGS Ground Handling Inc. (Equity Pick-up)


Registered on August 28th, 2008 to Commerce

JP`B&H Airlines`d.o.o.Sarajevo (Equity Pick-up)


Owned 49% by THY. Founded in 1994 as Bosnia Herzegovinas

Registrary.

During the 1H10, posted revenues and net loss was

national airline under the name Air Bosnia. and loss was 5 mn and 2 mn, respectively.

30 mn and 5 mn respectively.

During the first half of 2010, posted revenues

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Subsidiaries & Affiliates


SUN EXPRESS
Sun Express A.S. (Equity Pick-up) Founded in October 1989 as a subsidiary company of

Lufthansa and Turkish Airlines.

Owned 50% - 50% by THY and Lufthansa, respectively. Market leader in charter flights between Germany and

Turkey.

Flies to/from 22 airports in Germany, 20 in Turkey and 45

in other countries.

Fleet consisted of 24 aircraft; 21 B737& 3 B757 aircraft

with total seat capacity of 4,611 as of June 2010.

2 brand new Boeing 737/800s have been delivered, will

add 4 brand new Boeing 737-800s to its fleet until the end of 2010. 3 B757 aircraft will be returned to the lessor until the end of 2010.

Carried 2,883,948 passengers in 2010, by achieving load

factor of 72.88%.

As of June 2010, number of personnel:1,417 During the 1H10, posted revenues and net loss was 185

mn and 51 mn respectively.

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Subsidiaries & Affiliates

THY OPET HAVACILIK YAKITLARI A.S.


THY Opet Havaclk Yaktlar A.S
In terms of investment on jet fuel supply; Turkish

Airlines established a jet fuel supply company together with local oil retailer OPET on the 18th of September 2009.

Owned 50% - %50 by THY and OPET. The business activity of the established company is to

supply jet fuel to any type of aircraft.

Start supplying jet fuel to THY for all Domestic

Airports other than Sabiha Gokcen Airport as of July 1th 2010.

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Safety & Quality


In civil aviation, safety and quality supports each other and quality systems aim to maintain develop safety as a whole. Safety, as it would commonly be well appreciated and generally accepted, is the key concept to consider for operations. Thus, Turkish Airlines is determined to keep and develop highest safety standards. Accepting and implementing the standards dictated by the aviation authorities and manufacturers as the baseline, Turkish Airlines strives to attain safer operational conditions in respect to continuous development processes and appreciates this concept as a must.

Flight Safety:
The following have been implemented and monitored by utilizing the quality system of Turkish Airlines; Adoption of Safety Management System approach Implementation of Flight Data Monitoring (FDM) system Manage and assess the risk of flight operations Publications to flourish a widespread culture for operational safety

The Flight Safety Department that has direct access to the Accountable Manager is in charge of the management and oversight of the flight safety. It also implements the Flight Data Monitoring System, makes informal Line Observations and investigates the occurrences and reports (mandatory/voluntary) to promote flight safety.

Quality System: In accordance with JAR OPS 1, starting with the date of 1999, the Quality Assurance and Flight Safety Department, has been inaugurated. Based on the requirement JAR OPS 1.035, Turkish Airlines established a quality system dedicated to ensure safe operational practices and airworthy aeroplanes. Our company is an IOSA operator since 2005. Nowadays, we are preparing ourselves to implement ICAOs Safety Management System and Security Management System. In addition to the aviation sector standards, Turkish Airlines adopted generic standards for quality, such as ISO 9001 Quality Management System, 14001 Environmental Management System, OHSAS 18001 Occupational Health and Safety Management System, ISO 27001 Data Security Management System and ISO 10002 Customer Satisfaction Management System. As a result, Turkish Airlines quality system is an integrated approach covering standards for aviation and generic systems. Quality Assurance Directorate which is also reporting directly to Accountable Manager is in charge of the implementation and oversight of the quality system. The departments within this directorate are; Flight Operations, Ground Operations, Technic, Cabin, Flight Training, Quality Management and Improvement. Turkish Airlines has a quality assurance program which consists of all planned and unplanned audits that ensures all operational activities to be carried out according to all aviation requirements, standards and procedures. It has also a continuous process that brings forward solutions and suggestions on potential non-conformities in the context of preventive action. Due to its vast operation network, Turkish Airlines is in close contact with numerous Civil Aviation Authorities and subject to their audits. These audits, as well as giving the opportunity to the auditors to evaluate the current situation, provide the necessary feedback for Turkish Airlines continuous safer operations. In addition to above all, having all requirements fulfilled and systems in place with regards to Turkish Civil Aviation Law, Turkish Airlines has the AOC (Air Operator Certificate) approved by Turkish Civil Aviation Administration (CAA).

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