turkish airlines in 2015

182 Pages·2016·6.56 MB·English

ANNUAL REPORT 2015
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STEERING
HAPPINESS
TURKISH AIRLINES GENERAL MANAGEMENT BUILDING
Atatürk Hava Limanı Yeşilköy 34149 Istanbul/Turkey
Telephone: [phone]
IN THE SKIES! Fax: [phone]
Booking: 444 0849
[email protected] (Investor Relations)
We are now one big family carrying over 60
million passengers. Our responsibility is also
big: we must ensure the satisfaction of every
passenger we carry, both on the ground and
in the sky. Because we work for them.
Although we are not the largest airline in
the world yet, we continue to be the best
in passenger satisfaction. In terms of
satisfaction, our aircraft are fully equipped
take off towards happiness!
Our aircraft are equipped with various features to boost satisfaction:
Award-winning features Special destinations Delicious treats Technological equipment Multilingual crew Exclusive transfer
CONTENTS
03 TURKISH AIRLINES AT A GLANCE
04 FOR OUR SHAREHOLDERS
04 Financial Analysis
08 Industrial Developments and Forecast for 2016
10 Message from the Chairman
14 Board of Directors
17 Mission and Vision
18 Strategies
20 TURKISH AIRLINES GROUP
20 Affiliates and Subsidiaries
26 Traffic Figures
28 Fleet
30 Flight Network
34 Turkish Airlines in 2015
36 Activities
36 Cargo
38 Maintenance & Repair
40 Catering
42 Ground Handling
44 Training
50 Other Services
56 Human Resources
58 Quality and Corporate Responsibility
60 Corporate Communications
64 Financial Risk Management
68 Organizational Chart
70 Corporate Governance Principles Compliance Report
81 Assessment of the Board on the Effectiveness of the Board Committees
82 Assessment of the Board on the 2015 Results
83 Legal Disclosures and Documents
84 Statement of Independency
87 Report on Affiliates
88 Statement of Liability
89 CONSOLIDATED FINANCIAL FIGURES
89 Consolidated Financial Statements and Footnotes as of December 31, 2015
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Turkish Airlines Annual
Report 2015 online
2 TURKISH AIRLINES ANNUAL REPORT 2015
CROWNED
QUALITY
Turkish Airlines’ strong commitment
to passenger satisfaction has been
crowned by Skytrax, the world’s
leading and most prestigious airline
and airport auditing and consulting
firm. “Skytrax Passengers Choice
Awards” has chosen Turkish Airlines
the “Best Airline in Europe” again, for
the fifth time in a row.
OVER-THE-TOP
ENTERTAINMENT
With implementation of numerous
innovations, Turkish Airlines
makes traveling much more
enjoyable by offering pleasant
surprises to passengers.
Believing that in-flight
entertainment systems add
a distinctive value to travel
comfort, we offer exclusive
headsets to our Business and
Economy guests for a better
music experience.
FOR OUR SHAREHOLDERS TURKISH AIRLINES GROUP CONSOLIDATED FINANCIAL FIGURES 3
TURKISH AIRLINES AT A GLANCE
Turkish Airlines SHAREHOLDING STRUCTURE
OF TURKISH AIRLINES
is the airline
that flies to the
most countries
and international 50.88% Other (publicly-traded)
destinations 49.12% Privatization Administration of the
Prime Ministry of Republic of Turkey
worldwide.
Turkish Airlines has been operating in domestic
and international passenger and cargo
transportation by air as its mainline business since
its establishment in 1933.
50.88% of the company’s shares are publicly-
traded whilst 49.12% are held by the Privatization
Administration. Paid-in capital of the Company
amounts to TRY 1.38 billion. The Company has 13
subsidiaries in total, of which 3 are wholly-owned
subsidiaries and 10 are joint ventures.
Turkish Airlines is the airline that flies to the most
countries and international destinations worldwide.
Moreover, the Company ranks 7th in the number of
international passengers and 13th in revenues.
By the end of 2015, Turkish Airlines increased the
number of aircraft in its fleet to 299 from 261 as
at the end of 2014. The fleet consists of 73 wide-
body and 216 narrow-body and 10 freighter aircraft.
As of 2015, Turkish Airlines flies to 287
destinations in total with 51 domestic and 236
international destinations. The Company’s
passenger volume increased by 12.0% year-over-
year to 61.2 million in 2015. Passenger volume
grew by 15.8% on domestic routes and 9.3% on
international routes. The number of passenger
aircraft landings increased by 9.6% to 452,982.
Cargo-Mail transportation volume has also risen by
7.9% to 720.440 tons in 2015.
4 TURKISH AIRLINES ANNUAL REPORT 2015
FINANCIAL ANALYSIS
SALES REVENUES NET PROFIT EBITDAR
(US$ MILLION) 0 (US$ MILLION) 9 (US$ MILLION) 0
11,07 10,522 845 1,06 2,085 2,58
2014 2015 2014 2015 2014 2015
26% 24%
Net Profit rose by 26% EBITDAR rose by 24%
to US$ 1.069 million to US$ 2.580 million
INCREASED COMPETITION LED TO KEY FINANCIAL HIGHLIGHTS
DECLINE IN GLOBAL REVENUES
2015 has been a challenging year in many (US$ million) 2014 2015 Variation (%)
aspects, both for the aviation industry and for
Yield (Net) 11,070 10,522 -5
Turkish Airlines specifically. Up to 35% decrease
in fuel costs, which represents the highest Net Profit 845 1,069 26
cost item for airlines, brought in increased Net Profit Margin (%) 7.6 10.2 2.5
capacity and as a result, increased competition
EBIT 808 1,039 28.6
in the industry. According to IATA data, global
EBIT Margin (%) 7.3 9.9 2.6
passenger and cargo revenues of airlines
declined by 5.7% and 17.5%, respectively due to EBITDAR 2,085 2,580 23.8
increased competition. EBITDAR Margin (%) 18.8 24.5 5.7
Fluctuation in exchange rates was another
Passenger revenues represented 89% and cargo LEADER AMONG OTHER FLAG CARRIERS
factor that had an influence on demand and
revenues accounted for 9% of total revenues in Turkish Airlines expresses its profitability and
airline financial metrics. Depreciation of Euro, in
2015. cash generation potential in EBITDAR (earnings
particular, and the currencies of all developing
before interest, taxes, depreciation, amortization,
countries against US Dollar caused the industry
NET PROFIT AT RECORD LEVEL and rent costs), which is a common performance
to have a hard time in pricing and planning
Turkish Airlines has the most effective cost criterion in aviation industry. The Company’s
issues. Still, global passenger traffic increased by
management compared to its competitors in EBIDTAR was US$ 2.6 billion with a margin
6%, the highest growth rate recorded for many
the industry, and despite the decline in its total of 24.5% in 2015, a record level among other
years. As costs decreased, profitability of airlines
revenues, the Company managed to increase its global flag carriers. Turkish Airlines, reaching an
rose significantly.
net profit by 26% to approximately US$ 1.1 billion average EBITDAR margin of 19.5% for the last five
in 2015, the highest level ever achieved in its years, continues to be one of the most profitable
In 2015, Turkish Airlines managed to limit the
history. According to IATA statistics, average net airlines in the industry.
decrease in its revenues thanks to its effective
profit margin of airlines was around 5% in 2015,
revenue management and geographically diverse
however Turkish Airlines increased its profit
source of revenues. Total sales revenues of the
margin from 7.6% to 10.2%, which is well above
Company decreased by 4.9% to US$ 10.5 billion.
the industry average.
FOR OUR SHAREHOLDERS TURKISH AIRLINES GROUP CONSOLIDATED FINANCIAL FIGURES 5
Turkish Airlines AVERAGE EBITDAR
24.5%
MARGIN 2011-2015:
increased its net 19.5% (US$ MILLION) 19.4% 18.8% 18.8%
16.0%
profits by 26% to 0
8
5
5 2,
approximately US$ 0 598 1,849 2,08
1.1 billion in 2015. 1,13 1,
2011 2012 2013 2014 2015
USC
8.46 7.92 7.94 7.74
6.42
Total CASK
3.85 3.49 3.63 3.66 3.40
Other/ASK
2.95 3.00 2.96 2.82 1.96
Fuel/ASK
1.65 1.43 1.36 1.26 1.07
Personnel/ASK
2011 2012 2013 2014 2015
NUMBER ONE IN PRODUCTIVITY
Turkish Airlines unit costs per available seat
kilometers reduced by 17.0% to USc 6.42 in
2015. This reduction mainly resulted from the
drop in oil prices, along with the increased labor
productivity and effective cost management of
the Company. In 2005, Turkish Airlines stepped
up its labor productivity with 2.212 passengers
per employee, outperforming the average of its
main competitors* for 2014 (1.541) by 43%.
With 37% of operational costs incurred in Turkish
Lira, Turkish Airlines was positively influenced by
the depreciation of Turkish Lira against US dollar,
maintaining its global advantage of lower unit
costs in 2015.
“Main Competitors: Delta Airlines, American Airlines,
United-Continental Airlines, Lufthansa, Air France-KLM,
IAG, Singapore Airlines and Emirates.
6 TURKISH AIRLINES ANNUAL REPORT 2015
FINANCIAL ANALYSIS
TURKISH AIRLINES INC. - BIST 100 PERFORMANCE BENCHMARK
TURKISH AIRLINES INC. BIST 100
120
100
80
60
5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 6
01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
January 02, January 16, January 30, February 13, February 27, March 13, March 27, April 10, April 24, May 08, May 22, June 05, June 19, July 03, July 17, July 31, August 14, August 28, September 11, September 25, October 09, October 23, November 06, November 20, December 04, December 18, January 01,
THE SECOND MOST-ACTIVE STOCK BREAKDOWN OF REVENUES BY CATEGORY BREAKDOWN OF REVENUES BY REGION
Turkish Airlines’ stocks have been listed on
Istanbul Stock Exchange ‘Borsa İstanbul’ Variation
Variation
(BIST) under the Ticker Symbol “THYAO” since (US$ million) 2014 2015 (%) (US$ million) 2014 2015 (%)
1990. Percentage of publicly-traded shares of Passenger Revenues 9,858 9,368 -5
Domestic 1,429 1,373 -3.9
the Company rose to 50.88% after the two
Cargo Revenues 973 935 -3.9
secondary public offerings in 2004 and 2006. Middle East 1,315 1,335 1.5
Investors consider Turkish Airline shares as Other 239 219 -8.3
Europe 3,559 3,166 -11.0
one of the most preferred stocks in Turkey TOTAL 11,070 10,522 -4.9
with a high liquidity and wide investor base for Africa 915 826 -9.7
many years. Turkish Airlines’ shares were the
BALANCED INCOME PORTFOLIO Americas 1,195 1,270 6.3
second most actively traded stock on Borsa
Istanbul with a trading volume of TRY 68 billion Turkish Airlines’ extensive flight network provides Far East 2,418 2,333 -3.5
a natural hedging mechanism against regional
in 2015. The Company’s share price, however, TOTAL 10,831 10,303 -4.9
crises by diversifying the Company’s income
underperformed by 9% in comparison to Borsa
stream. According to the distribution of global
Istanbul due to several negative developments
revenues by region in 2015, Europe still enjoys
which are believed to have direct impact on BREAKDOWN OF REVENUES BY REGION (%)
the largest share although with a fall from
air transportation such as geopolitical risks in
32.9% to 30.7%, whilst Middle East and America
operational regions and global security concerns, 30.7% Europe
increased their shares with newly-launched
in 2015. 22.6% Middle East
long-distance routes such as Taipei, Manila, San
13.3% Domestic Routes
Francisco and Miami. 72% of all tickets were sold
13.0% Middle East
on international markets, which corresponds to
12.3% Americas
nearly US$ 7 billion worth of service exports.
8.0% Africa