Turkish Airlines became one of the first major carriers to post a profit this year after a boost in freight revenues helped it ride out a continuing passenger slump triggered by the coronavirus crisis.
The Istanbul-based company said it posted first-quarter net income of $61 million, or 438 million liras, even as sales declined, reversing a year-earlier loss and beating analyst estimates.
The carrier tapped into demand for cargo space that has been in short supply during the pandemic with fewer flights offering capacity in the holds of passenger aircraft. Foreign-exchange and tax gains also buoyed earnings, while operating expenses for everything from pilot wages to fuel were reduced.
“The increased focus on cargo operations during the pandemic paid off,” said Burak Isyar, head of research at ICBC Turkey Securities.
While airlines are beset by uncertainty as governments work toward resuming travel with the virus still raging, carriers with strong freight businesses have fared best. FedEx Corp., the biggest cargo airline, jumped the most in six months on March 19 as higher prices and online shopping lifted profit, while Qatar Airways, the No. 2, has resisted slashing capacity to target freight flows.
Turkish Airlines, which has one of the industry’s biggest global networks, reported a year-earlier loss of $327 million in what’s always a low season for airlines. Analysts surveyed by Bloomberg had predicted a loss of $6.4 million.
Shares of Turkish Airlines closed 5.6% higher prior to the publication of the results after markets closed Monday. They were priced 1.5% lower as of 12:01 p.m. Tuesday.
Details from investor presentation:
- Cargo revenues rose 77% to $824 million while passenger revenues fell 55% to $901 million.
- Operating expenses declined by almost $1 billion, with fuel costs down 47%, personnel 38% and sales and marketing 42%.
- East Asia was the No. 1 revenue provider at 31% of the total. The region is the biggest source of cargo flows to Europe, which have been booming amid a switch to online shopping during lockdowns.