Earnings Report /
Turkey

Turkish Airlines: In line with our expectations but higher than consensus

  • THYAO posted US$1,515mn net income in 3Q22, in line with our estimate and 12% higher than consensus estimate.

  • The company recorded US$1,911mn EBITDA which was 7% above our expectation of US$1,782mn.

  • In 3Q22, THYAO recorded 31.5% EBITDA margin 150bps higher than our estimate of 30.0%.

Mustafa Bayram
Mustafa Bayram

Equity Research Analyst

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ATA Invest
4 November 2022
Published byATA Invest
  • Turkish Airlines posted US$1,515mn net income in 3Q22, in line with our estimate of US$1,519mn net income and 12% higher than consensus estimate of US$1,351mn net income.

  • The company recorded US$1,911mn EBITDA which was 7% above our expectation of US$1,782mn. In 3Q22, THYAO recorded 31.5% EBITDA margin 150bps higher than our estimate of 30.0%.

  • The company’s net debt decreased by 7% q/q to US$8.2bn, implying 1.7x Net Debt/EBITDA in 3Q22 compared to 2.1x in 2Q22.

THYAO posted US$6,068mn consolidated revenue in 3Q22, 2% higher than our estimate of US$5,940mn. In 3Q22, passenger revenues surged by 114% y/y to US$5,083mn whereas cargo revenues decreased by 9% y/y to US$877mn during the same period.  Cargo revenues constituted 14% of total revenues in 3Q22, compared to 28% in 3Q21 and 23% in 2Q22.

In 3Q22, RASK was up by 37% y/y, while CASK was up by 19% y/y. Passenger RASK was up by 49% in 3Q22. Ex-fuel CASK was down by 4% y/y to US$4.19 in 3Q22. Personnel cost per ASK increased by 16% y/y to US$0.96 in 3Q22.

Total PAX surged by 40% y/y to 23.0mn in 3Q22. On segmental basis, international and domestic PAX increased by 72% and 2% y/y, respectively, to 15.3mn and 7.7mn in 3Q22. Total ASK increased by 44% y/y in 3Q22. Total load factor was up by 14.41pts y/y to 85.9% in 3Q22. In 3Q22, international load factor increased by 15.71pts to 85.3% whereas domestic load factor increased by 895bps to 91.4% in the same period.

THYAO recorded US$1,911mn EBITDA in 3Q22, 7% higher than our expectation of US$1,782mn. In 3Q22, gross margin increased to 30.8% from 29.1% y/y, in line with our estimates of 30.8%. In 3Q22, OPEX/Sales increased to 7.1% from 8.6% y/y, higher than our estimates by 149bps. 

The company’s net debt declined by 7% q/q to US$8.2bn in 3Q22 from US$8.8bn in 2Q22 mainly due to strong EBITDA. THYAO purchased 6 narrow body and 3 wide body aircrafts in 3Q22. THYAO’s NWC requirement increased by US$762mn q/q in 3Q22. Receivable days decreased by 6-days q/q, inventory days decreased by 1-days q/q and payable days decreased by 6-days q/q in 3Q22. Cash conversion cycle decreased by 1-days q/q in 3Q22.

The company will hold an analyst teleconference today (03 November, 2022) at 17:00PM Istanbul time.