THY seeks to be Turkey’s largest export company
ISTANBUL- Hürriyet Daily News
THY has many earnings that it generated abroad, its CEO Kotil says.Turkish Airlines (THY) would be Turkey’s largest export company, if the services sector was included among export sectors, according to THY CEO Temel Kotil.
The recognition as the country’s largest exporter would allow the company to benefit from incentives that are granted to industrial export companies, Kotil told Hürriyet Daily News.
“Only about 16 percent of THY’s total annual turnover of $8 billion comes from domestic lines. You could also exclude the revenue from those who fly abroad from Turkey, but we have sales generated purely abroad. That revenue should be accepted as export revenue. Nearly 70 percent of our total turnover is generated from ticket sales abroad,” Kotil said, speaking on the sidelines of a press conference last week.
In Turkey the services sector is not included in official tallies of exporting industries. This prevents service companies that generate revenue abroad from benefitting from such incentives as tax breaks.
“THY will be the country’s largest export company next year, if the sales generated abroad were recorded as export revenue. It should be counted as export revenue, if there is a cash inflow from abroad,” Kotil said, adding that this would help the local tourism sector even more than it would help THY.
The government is working to change the regulations in a way that may see THY crowned as Turkey’s largest export company next year.
Turkey’s largest exporter is TÜPRAŞ, the national oil refiner, with a $4.2 billion export volume in 2011, according to the Turkish Exporters Assembly (TİM).
Turkey’s national air carrier has also become one of the largest in its sector in terms the number of destinations it serves. It now flies to 204 destinations in 90 countries, giving it currently the fifth-largest flight network in the world, according to its official website.
THY’s rapid expansion in recent years has led to questions about whether the motive behind the expansion is commercial or political. Every decision to add an additional destination is based primarily on the company’s commercial interests, Kotil said.
“The EBITDAR margin in the first half of the year was 11 percent. The figure for many European companies was about 5 percent, which means they recorded a loss, because investment costs are generally higher than 5 percent of the turnover,” Kotil said, adding that the EBITDAR margin has been at 18 since 2006. EBITDAR is an acronym for “earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs.”
THY uses 10 percent of earnings to finance investments, and the rest lies in the company’s coffers. THY holds more than $2 billion in cash and no debt in cash, Kotil said, meaning it is financially capable of making acquisitions.
“We are not closed to [acquiring] companies in the Balkans or elsewhere,” he told the Anatolia news agency Oct. 11. “We have become the airline that flies to the highest number of countries. We will also be the airline that flies to the highest number of destinations, as we plan to continue launching new destinations.”
THY is very close to catching up with Lufthansa and Air France in terms of the number of destinations it serves, but those airlines are larger in terms of passenger numbers, Kotil said. “Those airlines have 2,000 flights per day, whereas THY flies 1,000. We have room to increase our flight numbers.”