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bne Invest
June 21, 2019 www.intellinews.com I Page 11
Stock in Turkey’s budget carrier Pegasus soars with Turkish Airlines mired in mega airport teething troubles
Istanbul’s new airport appears to have proven a drag on the stock of Turkey’s flag carrier Turkish Airlines, but its launch three months ago at the same time seems to have boosted the shares of its budget rival Pegasus, Bloomberg wrote on June 18.
The stock of Pegasus Hava Tasimaciligi has outperformed that of Turk Hava Yollari AO, or Turkish Airlines as the company is known, by more than 95 percentage points this year. The divergence has been amplified by bets that it stands to gain amid setbacks that have plagued its rival – Turkish Airlines is now flying primarily from the new mega airport opened 20 miles outside Istanbul city centre.
The $12bn Istanbul Airport is located on the foggy Black Sea coast and local reports show it struggling against far too many diverted flights, delays and long runway taxi times, all of which threatens to erode Turkish Airlines’ earnings.
Meanwhile, Pegasus is the choice for many pas- sengers determined to steer clear of any incon- venience. By choosing Sabiha Gokcen International Airport – Istanbul’s second airport on the Asian side of the city following the closure of Ataturk Air- port to commercial flights to facilitate the opening of Istanbul Airport – they can easily opt for Pegasus as that is where the bulk of its flights operate from.
Read the full story here Russian air carriers post record loss in 1Q19
Russian air carriers posted a cumulative record- loss of RUB45.3bn ($704Mn) in January-March 2019, RBC business daily reported on June 17 citing a report by industry association.
The loss posted by the industry is alarming, as it is already almost as much as the RUB50bn loss posted by the sector for the entire 2018, despite the seasonally weak first quarter during which the leasing payments peak and loading factors are lowest. Out of the RUB43bn loss the lion shares was from the top 10 largest airlines and mostly caused by a 30% rise in the cost of jet fuel.
As reported by bne IntelliNews, the industry
is being compromised by high fuel prices and declining incomes, while the Finance Ministry
recently resisted supporting the carriers in the face of rising fuel prices.
Fuel costs amounted to RUB89bn out of total costs of RUB352bn, while RUB93bn accounted
for leasing costs and RUB53.6bn for airport fees. Analysts surveyed by RBC believe that fuel costs outpacing the revenues indicate that the carriers have been avoiding sharply raising the ticket costs as they battle for market share.
The situation could change in 2020 as the carriers risk sustaining two consecutive years of losses. RBC reminds that net profit of Russian national air carrier Aeroflot was slashed four-fold under IFRS in 2018, but the company recently said it is not intending to raise prices.