Turkish Airlines back in black on cargo revenue

Turkish Airlines became one of the first major carriers to post a profit this year as rising cargo revenues across the industry helped fill the gap in passenger transport losses due to the pandemic.

The Istanbul-based company, which is 49.12 percent owned by the Turkish Wealth Fund (TVF), said it posted a first-quarter net income of $61 million - a remarkable turnaround from a second quarter loss of $287 million.

“The increased focus on cargo operations during the pandemic paid off,” said Burak İşyar, head of research at ICBC Turkey Securities.

Airlines will rake in record-high cargo revenues in 2021 on double-digit growth in shipping demand, but lose $47.7 million because of weak passenger air travel as most countries struggle with controlling coronavirus variants and vaccinating populations against COVID-19, the International Air Transport Association said Wednesday.

Airlines lost $126.4 million last year, according to IATA. The sector is expected to burn $81 million in cash on top of the $149 million in negative cash flow last year.

Air cargo is booming, aided by a strong recovery in the global economy and manufacturing exports, and heavy inventory restocking. It recovered to pre-crisis levels earlier this year, and throughput is now expected to increase 13.1 per cent over 2020. IATA estimates total cargo volumes will reach 63.1 million tons in 2021, just below the pre-crisis peak of 63.5 million tons that occurred in 2018.

The high demand combined with the removal of significant wide body passenger capacity on international routes will drive up yields an additional 5 percent this year, on top of the 40 per cent gain in 2020, enabling all-cargo and passenger airlines to rake in $152 million, a historic high. Airlines generated $128 million in cargo revenue last year and $101 million in 2019. 

For Turkish Airlines, cargo revenues rose 77 percent to $824 million while passenger revenue fell 55 percent to $901 million. Meanwhile operating expenses declined by almost $1 billion, with fuel costs down 47 percent, personnel 38 per cent and sales and marketing 42 percent.

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