Turkish Airlines' targets for 2016 display its confidence in spite of unit revenue risks
On 12-Jan-2016, Turkish Airlines (THY) published detailed targets for 2016 on the development of its fleet, network, traffic, workforce, revenue and earnings. It expects 2016 to be a year of strong capacity growth, led by expansion in America and Africa. The fleet will expand further across the network, while retaining its narrow body bias. The labour force will grow, but with improved productivity, enabling THY to continue on its existing strategic network development path. Although its expects a fall in unit revenue, it also anticipates improving profitability thanks to lower fuel prices and control over ex fuel costs.
Over the past decade, THY has increased its ASKs at an average rate of 18% pa, doubling its ASKs every four or five years. Such rapid and relentless capacity growth puts downward pressure on unit revenue. Moreover, in 2016, macroeconomic uncertainties and geopolitical events add to the risk of a further weakening in unit revenue.
Nevertheless, it has a solid track record of riding out such risks. Its relatively unusual decision to publish such detailed guidance at the start of 2016 suggests that it is feeling confident about the year ahead.
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