THY turns profit in 2003

Gundogdu held a press conference for the Association of Economic Journalists last night where he said, "We have taken measures to ensure that profits reach their 2002 level."

Gundogdu said that THY made its first profit ($65 million) in 2002 and that THY is one of the most important of the government institutions that will be privatized.

Gundogdu said: "Despite the war in Iraq and the SARS crisis, tourism has increased in the second half of 2003 and the economic revival has lifted the number of passengers to 10.5 million. The institution’s turnover for this year will be $1.5 billion, which is similar to 2002."

THY cancelled most of its flights to cities near Iraq during the war and the number of passengers travelling to those cities dropped 50 percent in 2003. The SARS crisis emerged in the Far East during the first half of 2003, affecting the number of passengers who traveled with THY. Gundogdu said that THY was in a similar situation during the first Iraq war, and the administration had begun to entertain doubts that wages would be paid.

Gundogdu said that THY increased its productivity during the second half of 2003. He said that the tourism sector expects a greater increase in 2004 and added, "We expect 10 percent growth after next year." Gundogdu said that THY’s fleet of 65 airplanes was not able to meet demand during this period. Research into the feasibility of increasing fleet size is under way and will be completed before the 2004.

THY flies to 76 international and 25 domestic destinations.

Gundogdu also talked about the privatization of THY and said that foreign investors are very interested in THY. Only 40 percent of THY can be sold to foreigners when it is privatized. This point worries foreigners because foreign investors typically want to purchase 51 percent of this type of institution. Gundogdu said the profitability index of institutions carries great weight in the privatization process and added, "If profitability is not demonstrated, the demand will not be high."

Gundogdu said the value of THY is $800 million, according to the Istanbul Stock Exchange (IMKB). He added that THY’s value is $800 million because profits are low and that the real value of THY was much greater. He said steps would be taken to improve profitability.

THY will continue to provide technical services for other airlines. THY made $38 million in profits from these technical services in 2002. The 2003 profits from technical services are expected to increase to $60-70 million and THY plans to increase that figure to nearly $100 million in the next several years. Various airlines from European countries purchase technical services from THY, including several of Turkey’s neighbors. THY had to reject certain technical service requests due to lack of capacity. THY will construct a new hangar, costing $20 millions, at Sabiha Gokcen Airport in Istanbul, according to Gundogdu.