Turkish Airlines (THYAO TI) - Strong yields vs higher fuel costs: Maintain Buy
Turkish Airlines reported a net loss of TRY314m in 1Q18, better than our estimated loss of TRY452m and the Research Turkey consensus estimate loss of TRY533m. The divergence originated from lower-than-expected financial expenses. 1Q18 EBITDA of TRY1b was in line with our estimate of TRY1.1b and the consensus TRY1b.
Despite the sharp increase in fuel expenses and USD weaknesses against the JPY and EUR, Turkish Airlines posted a solid operational performance, backed by strong yield growth.
We cut our 12M TP by 7% to TRY19.43, on higher jet fuel costs after the change in crude oil pricing dynamics. We also incorporate higher unit revenues and the updated fleet expansion plan into our numbers. We maintain our BUY rating.
Turk Hava Yollari is engaged in the airline industry with the airline flying to 103 destinations, throughout Turkey and internationally. As of the year end, Co. maintains 66 aircrafts with a total seat capacity of 10,672, and leases a A300-200 cargo aircraft. Co. has various services for their customers which include: various ways of checking in and on-line ticket sales.
TEB Investment equity research analysts and strategist team consists of 8 analysts with an average finance sector experience of 15 years and special focus on international investors.
With our 6 equity research analysts we cover 93 companies across 21 sectors, reflecting 80% of the total market capitalization of all BIST companies and 86% of the BIST100 companies. Our strategy team provides in depth top-down and bottom-up market views with insight on FX and bond markets by publishing sectoral and strategic reports both in English and Turkish.
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