Fuel Costs Hit Turkish Air's Profit

August 23, 2010

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Turkish Airlines, Europe's fourth-biggest airline by passenger numbers, returned to profit from a year-ago loss in the second quarter but rising fuel costs hit operating profit.

Net income reached TRY58.7 million lira (USD$105 million), versus a loss of TRY53 million in the same period last year.

Sales rose to TRY2.09 billion from TRY1.73 billion

Rising global oil prices lifted fuel costs by 64 percent in the first half of the year to USD$655 million, the airline said.

"This had a negative effect and operating profit fell 36 percent to TRY115 million," it said in a statement.

"There was a narrowing in the margins because of the negative impact of oil prices and the euro's fall against the dollar," said Ozgur Goker, analyst at UniCredit in Istanbul. "The rise in fuel costs hasn't been reflected as quickly in ticket prices."

The EBITDA margin was 8 percent in the first half of the year, compared with 12 percent in the same period of 2009.

Goker said that if Turkish Airlines continues to lift traffic figures and raises fares it should post stronger results next quarter.

It carried 7.2 million people, a 14 percent year-on-year increase, in the second quarter, according to previously released figures.

(Reuters)