Turkish Airlines: the positives of global super-hubbing can turn awry as 2Q unit revenue falls

Turkish Airlines' operating profit fell in 2Q2015 compared with the same period a year earlier, after three successive quarters of improving results. It suffered a very heavy fall in unit revenue, mainly due to weak yield, but also the result of a dip in load factor. Pricing softness owed much to foreign exchange movements, but also highlighted a weaker balance of demand versus supply in a number of THY's many markets.

Turkish Airlines' strategy of connecting global traffic flows through its Istanbul hub has driven sustained growth over a number of years. However, this can also leave it exposed to a wide range of external demand risks around the globe and this is undoubtedly weighing on unit revenue and profits at the moment. It is also in the middle of a period of fierce competition with LCC Pegasus Airlines at Istanbul's second airport Sabiha Gokcen, the result of capacity constraints at Ataturk before the building of a new airport by the end of the decade.