Pegasus Airlines applied to the Istanbul Stock Exchange to sell up to 36% of the company in an IPO (Bloomberg/Today's Zaman, 15-Feb-2011). Pegasus plans to sell an initial 31.3% stake with an option to sell a further 4.7%. Pegasus Airlines was established in 1990 as a JV between Aer Lingus, Silkar Yatırım and Net Holding.
Pegasus to sell up to 36% of company in IPO
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Pegasus Airlines: still galloping (just), but no longer flying high, as Turkey events slow demand
Pegasus fell into loss in 2016, extending an unbroken trend of falling operating margins from the peak in the year of its stock market flotation in 2013. A series of geopolitical and terrorist events in Turkey weighed on market demand, leading to a drop in traffic in 2016.
Against this difficult backdrop, Pegasus slowed its expansion to single digits after years of double digit growth, but this remained ambitious in a falling market. In addition, its fleet grew faster than its traffic, piling on cost that did not generate sufficient revenue. It is now wet leasing aircraft to other airlines and deferring some new deliveries.
Pegasus' capacity growth is set to slow further in 2017, but it still looks fairly aggressive in a market that is again falling (according to OAG data). An increased focus on cost management may bring down ex fuel unit cost, but against this are rising fuel prices. Pegasus is likely to find a return to break even in 2017 to be a real challenge. In 2013 its margin was similar to those of its fellow ultra LCCs Ryanair and Wizz Air, but it has followed a worryingly divergent path since then.
Onur Air: Turkey's number two LCC goes into reverse after German expansion stalls
Turkey's fifth largest airline by seat capacity, LCC Onur Air, has thrown its operation into reverse. After growing scheduled seat numbers at an average rate of 11% pa for four years, including growth at around 20% for most of 2016, it will cut capacity by 20% this winter.
A series of geopolitical events has weighed heavily on demand for air travel in Turkey, particularly in international travel. Weak trading conditions have also prompted the market leaders – national airline Turkish Airlines and LCC Pegasus – to halt their own rapid growth. Onur Air is bigger in the domestic market than it is in the international market, but much of its 2016 expansion was driven by international growth, particularly to Germany.
Onur's network faces strong competition on almost every route, particularly on international routes, and this has clearly posed a severe challenge in the face of falling demand.