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Turkish Market Growth

Domestic (*)

International

('000,000)

50

Asia Pacific

CAGR 9.88%

27

44
41

4,4%

Latin America

4,2%

M.East

36

32

32

35

30

4,1%

CIS

3,4%

World

20

14

10

25

20

38

44

40

30

4,7%

Africa
52

CAGR 28.75%

51

60

Annual GDP Growth Forecast (2010-2030)

3,3%

North America

2003

2004

2005

2006

2007

2008

2009

2010

Europe

2,7%
2,0%

Source: General Directorate of State Airports Authority (DHMI). (*)Some pax counted double by DHMI

25%

RPK Growth %

Annual RPK Growth Forecast (2010-2030)


19,1% 19,2%

20%

15,4% 14,6%

15%
10%

14,1%

5,8%

5%

17,1%

19,4%
Latin America

13,3%

5,9% 6,0%

8,5%
4,3%

2,0%

2,4%

0%
-5%
-10%
-15%

2001
-4,3%
-9,9%

2002

2003

-2,2%
-2,9%

2004

2005

2006

2007

2008

2009

-1,1%

2010

Asia Pacific

6,7%

M.East

6,6%

Africa

5,1%

World

5,1%

CIS

4,3%

Europe

4,3%

North America

World RPK Growth

6,9%

2,9%

THY RPK Growth

CAGR: Compound Annual Growth Rate


Source: Boeing Current Market Outlook 2011-2030

20

TK
AEA

2007
TK
AEA

2008
TK
AEA

2009
TK
AEA

2010
50

40

30

0
0

TK
AEA

1H'11
20

10

TK

2007

9,0
10,4
9,1

8,9

2007

AEA

AEA
TK
AEA

2008

TK

2008

TK

AEA

AEA

2009

2009

Far East

TK
2010

5,5

TK
3,0
0,0
3,0

-6,1
-5,2
-5,3

0,6
3,4
2,0

14,6

16,5

PAX

% Change

AEA

ASK

AEA
TK

2010

ASK

TK

12,3
9,2
12,0

18,6

PAX

9,0

9,9

10,4

11,4
10,4

13,3

13,1

24,3

22,0
17,4

15,8
15,2
19,0

19,7

17,5
11,0
15,8

5,7
6,6
7,0
TK

10,3
14,8
8,8

RPK

AEA

42,4

ASK

Europe

25,6
27,1

PAX

-10
TK

3,1
-0,9
2,6

1H'11

7,7

2,7
0,0
2,6

-5,8
-4,2
-4,5

14,7
10,5
20,0

Middle East
AEA

22,9
28,3
22,4

2010

TK

10

1,0
3,5
0,4

AEA

20

5,0
4,9
1,9

2009
TK

30

4,2
0,7
3,1

60
AEA

RPK

26,3
28,5

2008
TK

ASK

14,4

%Change

AEA

9,9
11,8
9,2

80
TK

11,7
17,4
18,0

2007
12,3

% Change

7,6
12,6
6,1
14,0
13,6
15,7
8,2
0,8
3,8

0
-1,7
3,0
1,2

15,5
11,6
13,8

PAX

-6,0
-5,5
-5,9

40
26,6
35,3
29,9

-10
AEA

11,5
9,4
8,3

TK

54,8
55,2
61,1

4,1
4,2
5,1

10

10,0
4,4
9,5

20
15,6
11,9
19,0

30

30,7
12,9
28,7

Total
RPK

% Change

AEA

1H'11

RPK

-10
AEA

Source: AEA= Association of European Airlines (Scheduled Traffic)

1H'11

Weekly Frequency

7.000

6.000

33.0 mn pax

29.1 mn pax
2011 - 178
Aircraft

25.1 mn pax

5.000

2010 - 153
Aircraft

22.6 mn pax
4.000

2009 - 132

19.6 mn pax
2008 - 127
16.9 mn pax
11.9 mn pax 14.1 mn pax

3.000

2007 - 101
2006- 103

2005- 83
2004-73

2.000

2003- 65
Destinations

10.4 mn pax

1.000
90

100

110

120

130

140

150

160

170

180

190

200

AMERICAS (5)
CHICAGO (7)
NEW YORK (14)
SAO PAULO (4)
WASHINGTON D.C. (5)
ATLANTA
LOS ANGELES(4)

GERMANY (9)
BERLIN (21)
STUTTGART (21)
DUSSELDORF (28)
FRANKFURT (29)
HAMBURG (21)
HANNOVER (14)
COLOGNE(14)
MUNICH (21)
NURNBERG (14)

CANADA (1)
TORONTO (3)

AFRICA (17)
ADDIS ABABA (7)

LAGOS (4)

ALGIERS (7)

NAIROBI (7)

BENGHAZI (4)

TRIPOLI (13)

CAIRO (17)

TUNIS (7)

CAPETOWN (5)

ALEXANDRIA (4)

CASABLANCA (7)

DAR ES SALAAM (3)

DAKAR (3)

ENTEBBE(3)

KHARTOUM (7)

ACCRA (4)

JOHANNESBURG(5) ORAN

Planning to open
(Weekly Frequency)

FAR EAST (21)

EUROPE (75)

AMSTERDAM (21)
ATHENS (21)
BAKU (28)
BATUMI (7)
BELGRADE (7)
BRUSSELS (21)

UKRAINE (6)

U.K. (3)

ODESSA (7)
KIEV (9)
SIMFEROPOL (7)
DONETSK (2)
DNEPROPETROVSK (3)
LVIV(3)

SWITZERLAND (3)
BASEL(7)
ZURICH (17)
GENEVA(14)

SPAIN (4)
RUSSIA (7)
MOSCOW (24)
ROSTOV (3)
KAZAN (2)
ST.PETERSBURG (4)
EKATERINBURG (4)
UFA (4)
SOCHI (3)
NOVOSIBIRSK
BUCHAREST (21)
BUDAPEST (7)
CHISINAU (7)
COPENHAGEN (18)
DUBLIN (7)
GOTHENBURG (7)

FRANCE (4)

LONDON (31)
MANCHESTER (7)
BIRMINGHAM (5)

BARCELONA (18)
MADRID (14)
VALENCIA (4)
MALAGA (3)

PARIS (28)
NICE (10)
LYON (12)
TOULOUSE (3)

ITALY (6)
MILAN (28)
ROME (18)
VENICE (14)
BOLOGNA (7)
GENOA (3)
NAPOLI (3)
TORINO

OTHERS (33)
HELSINKI (10)
LEFKOSA (28)
LISBON (5)
LJUBLJANA (5)
MINSK (4)
OSLO (10)

PRAG (14)
RIGA (4)
PRISTINA (9)
SARAJEVO (7)
SKOPJE (7)
SOFIA (11)

STOCKHOLM (18)
TBILISI (14)
TIRANA (10)
VIENNA (21)
ZAGREB (7)
WARSAW (4)

NAKHICHEVAN (3)
PODGORICA (3)
THESALONIKI (4)

ALMATY (9)
ASHKHABAD (14)
ASTANA (3)
BANGKOK (14)
BEIJING (7)
BISHKEK (7)
DHAKA (4)
DUSHANBE (2)
GUANGZHOU (3)
HO-CHI-MINH (7)
HONG KONG (6)
JAKARTA (7)

KARACHI (4)
MUMBAI (7)
NEW DELHI (7)
OSAKA (5)
SHANGHAI (7)
SEOUL (7)
SINGAPORE (7)
TASHKENT (5)
TOKYO (6)
MANILA
ISLAMABAD
KABUL

MIDDLE EAST (22)


ABU DHABI (4)

MADINAH (13)

ALEPPO (7)

MASHAD (5)

AMMAN (14)
BAGHDAD (7)

MUSCAT (5)

BAHRAIN (7)

SANAA (4)

BASRA (3)

SHIRAZ (4)

BEIRUT (21)

TABRIZ (7)

DAMASCUS (18)

TEHRAN (14)

DOHA (7)

TEL AVIV (25)

DUBAI (14)

SULAYMANIYAH

ERBIL(2)

DAMMAM

JEDDAH (20)

MOSUL

KUWAIT (7)

NAJAF

RIYADH (7)

ORLU

SNOP
STANBUL
SAMSUN

STANBUL

TRABZON

MERZFON
ANAKKALE

BURSA

BALIKESR

ANKARA

KARS

TOKAT

ESKEHR

ERZURUM

ARI

ERZNCAN

SVAS

MU
NEVEHR

UAK

KAYSER

ZMR

KONYA
DENZL

DALAMAN

ADIYAMAN
ADANA
G.ANTEP

ANTALYA

VAN
DYARBAKIR

K.MARA

ISPARTA

BODRUM

ELAZI

MALATYA

.URFA

BATMAN

SIIRT

MARDN

HATAY

40
2006

2007

2008

2009

2010

1H'10

20

1H'11

70
60

(%)

68,6

50
40

0
2005

Domestic Passengers (mn)

2006

2007

2008

2009

2010

1H'10

1H'11

International Passengers (mn)

20

20

15
10

80

32,2

(%)

50

70,1

67,7

71,4

22,1

5,0
3,8

4,0

5,3

10,4
8,0

9,0
6,8

8,5
6,4

8,1
5,9

7,1
5,2

5,5
4,0

(Billion)

60

40

72,6

73,1

73,6

L/F (%)

25,4
18,1

70

2005

60
71,1

8
4

80

RPK

54,7
40,0

74,8

47,5
33,3

76,0

37,9
27,8

76,6

ASK

33,5
24,3

73,0

75,4

International

L/F (%)

29,8
20,2

73,2

73,6

75,6

RPK

24,3
17,3

12

ASK

(Billion)

Domestic

7,2

8,9

10,0

11,1

11,7

15,5

13,6

15
5%
6,4

6,7

10

0
2005

2006

2007

2008

2009

2010

1H'10

1H'11

6,9

2005

8,0

2006

9,7

11,5

13,4

15%
7,0

2007

2008

2009

2010

1H'10

8,0

1H'11

ASK

70
60

71,5

68,7

72,7

73,9

73,7
70,9

RPK

L/F %

80
72,2

60
37,5
26,1

30,4
21,9

47,9

(%)

65,1

40,1

56,6

46,3
34,3

41,6
30,3

36,9
25,4

30
29,8
21,3

(Billion)

40

10

1H'10 vs 1H'11

70

50

20

THY Passenger Traffic

69,5

50

Landing

up by 10.2%

ASK

up by 23.6%

RPK

up by 19.0%

Passenger # ('000)

up by 10.3%

L/F

down by 2.7 points

40

0
2005

2006

2007

2008

2009

2010

1H'10

1H'11

Intl. Traffic Breakdown by Geography

Market Shares
International

Middle East;
15,1%

Europe;
60,3%

Far East;
13,6%

THY 53%

Foreign
Carriers
29%

Other
Turkish
Carriers
18%

Africa; 6,7%
America;
4,3%

Domestic

Other
Turkish
Carriers
47%

THY
53%

Increasing Market Share in International Traffic


10

Number of Personnel*

20.000

12%

12.951

14.072

15.269

17.119

5.000

2006

2007

2008

2009

2010

17.840

12.807

2005

10.000

15.937

11.121

15.000

efficiency compared to its


peers.

0
1H'10

1H'11

* THY Technic Personnel is included.

2008

2009

2010

829

1.700

2007

As of June 2011, the

1%

841

1.642

2006

1.606

2005

1.516

500

1.323

1.000

1.271

1.500

Personnel cost of THY per

ASK was only 1.32 cents for


the first half of 2011.

Passenger per Employee

2.000

THY enjoys high personnel

1H'10

1H'11

utilization decreased in wide


body and narrow body
aircraft by 2,4% and 6,4%,
respectively.

Average Daily Flight Utilization (hrs)


16

WB Long-Haul

NB Medium Haul

14

12,31
11,00

13,26
11,32

12,49
11,40

14,12
12,06

13,07
11,55

12,48
11,09

11,47
10,18

10

12,38
10,32

12

2005

2006

2007

2008

2009

2010

1H' 10

1H' 11
11

Type
Wide Body
21%

Narrow Body
75%

Cargo

A330
A340
B777-3ER
Total
B737-900
B737-800
B737-700
B737-400
A320
A321
A319
Total
A310-300
A330-200F

TOTAL

Total
14
9
14
37

Owned

52
14
3
27
27
8
131
4
2
174*

11

7
7

11
3
21

Financial Operational Seat Avg.Fleet


Lease
Lease
Capacity
Age
12
2
3.835
3,4
2
2.446
14,7
10
4
4.618
1,7
22
8
10.899
5,4
27

13
21
4
65
2
89

2011

14
9
12
35
2
54
14
8.596
7,9
14
14
1.986
5,3
3
3
450
19,4
27
14
4.322
4,2
27
6
5.097
4,1
10
4
1.056
2,8
137
55
21.507
6
4
1
23
2
0,9
178
64
32.406
6,2
Year End Seat Capacity : 32.683
Seat Capacity Change : 17%

YEAR END FLEET


2012
2013
2014

17
7
12
36
9
56
12
3
27
31
8
146
4
3
189
34.571
6%

17
7
12
36
10
62
11
0
27
41
8
159
3
4
202
36.854
7%

17
7
12
36
10
71
8
0
27
41
6
163
3
5
207
37.489
2%

2015

17
7
12
36
15
70
2
0
24
41
6
158
3
5
202
36.670
-2%

* 1 Shorterm leased aircraft is not included

12

Fleet Additions of 105 Aircraft-ORIGINAL PLAN


Type

Wide Body

Narrow Body

Cargo
TOTAL

2010

2011

2012

2013

A330

B777-3ER

Total

10

B737-900

B737-800

A321

10

A319

2014

To Be Delivered
2015

TOTAL

2011

2012

10

18

15

17

10

A330-200F

10

29

19

18

11

22

15

20

24

10

65

5
5

92

2015

10

TOTAL

2014

12

10

Total

2013

2
0

15

10

20
18
2

15

17

10

19

18

11

55
3

63

Option aircraft 10 A321-200 and 15 B737-800/900ER became firm order as of March 2011 and total PDP payment for the new firm

orders will be approximately 408 Mn$ of which 45.8 Mn$ has already been paid as of August 2011.
Total PDP payment due from manufacturers is around 694.2 Mn$. (excluding options)

13

ASK %

RPK %

PAX %

10%
8,24%
7,53%

8%
6,14%
6%

5,24%
4,78%
4,15%

4%

2%

3,05%
2,91%

3,65%
3,31%

3,90%

3,69%

4,22%

8,33%
6,95%

6,33%
5,56%

6,43%

5,98%
5,22%

4,14%

THY ranks
forth
in passenger;
fifth
in ASK and RPK
market share
among AEA
member airlines

0%
2005

2006

2007

2008

2009

2010

1H'11

Source: AEA =Association of European Airlines

14

THY carried total of 5.302.196 transfer

passengers during Jan-June11, with


an increase of 11.2% compared to the
same period of 2010.

6.000.000

13%
5.043.188

42%

4.000.000

40%
38%

for 35.9% of the passenger traffic.

11.3%
2.341.857

3.128.895

43%

2.000.000

4.445.217

Total transfer passengers accounted

2.605.391

Intl to intl transfer passengers share

in total transfer passengers is 49.1%.

2.228.814
1.563.254

1.133.527

During Jan-June11, intt to intl


passengers increased by 11.3%
reaching to 2.605.391.

0
2005

2006

2007

2008

2009

2010

1H'10

1H'11

Intl to Intl Transfer Passengers continue to grow.

15

Split by Revenue

Pax Revenue Split by Geography

Cargo
8,9% Other
4,1%
Pax
86,1%

Charter
0,9%

Africa; 6%

America;
8%

Far East;
20%

Europe;
33%
Domestic;
19%

Middle
East;
15%%

Source: Financial statements released under Turkish CMB standards, converted to Euro using average exchange rates

16

Revenues (Mn)
Others*

Expenses (Mn)

International

Domestic

5.000

3,271

3.000
2.000
1.000
0

1,860
251
1.208

2,247

3,228

373

369

1.814

2.177

4.000

+% 20
2.949

2.266

2,235
1,857
+% 23310
232
1.276

401

471

598

2005

2006

2007

679
2008

636
2009

766
2010

Fuel

4,004

521

321

308

1.468

2,734

Personnel

5.000

4,236
4.000

Other

1.564

349

361

1H'10

1H'11

3.000
2.000

2,199

1.000
0

1.132

2,917
2.024

+% 32
2,370

1.240

1,804
928

2,449

2,837

1.216
622

1.549

1,797
887

656

436
441

452

572

614

661

976

712

2005

2006

2007

2008

2009

888

1093

406
502

2010

1H'10

1.103

494
773
1H'11

* Includes cargo, charter and other revenues


Source: Financial statements released under Turkish CMB standards, converted to Euro using average exchange rates

Able to Sustain Revenue Growth While Increasing Capacity


17

Cost Per ASK ( cent)


CASK

8,0

Personnel/ASK

Change in CASK( cent)

Fuel/ASK

Others /AKK

30%
6,05

6,0

5,95

5,89

6,15

6,12

Domestic

International

6,32

19%

20%

5,16

19%
18%

4,0

2,0

3,14

1,47
1,45

3,07
1,66

1,22

2,92
1,59
1,37

2,67

2,74

2,11
1,26
1,34

1,16

3,11
1,68
1,36

10%

2006

2007

2008

2009

2010

6%

2,94
2,06

1,32

2005

Total

1H'11

1%
0%
-10%
-20%

2006
-5%
-6%
-7%

2007

-5%
-6%

3%
3%

5%

5%
2008

11%

2009

2010

1H'11

-14%
-15%
-17%

-30%

Source: Financial statements released under Turkish CMB standards, converted to Euro using average exchange rates

18

Change in R/Y ( cent)


20%

Domestic

5%
0%

2%
2006

-10%

-20%

3%

-8%

1%
2007

International

Total

9%
7%

8%

10%

Change in RASK ( cent)

5% 5%

7%

4%
2008

2009

2010

20%

Domestic

10%
7%

10%
2%
1%
1H'110%

-13%
-13%
-16%

1%
0%

-10%

-20%

1%
2006

7%

International

15% 13%
9%

6%
4%
3%

2007

Total

2008

2009

-6%

2010

0%
1H'11
-4%
-4%

-16%
-17%
-17%

Source: Financial statements released under Turkish CMB standards, converted to Euro using average exchange rates

19

( Mn)
Fuel
Personnel
Landing
Ground handling
Depreciation
Sales and Marketing
Rents
Maintenance
Passenger Catering
Others
Advertising
General Administration
Insurance
TOTAL
Op.Cost per ASK ()
Op.Cost per ASK () except fuel

1H'10

% in Total

1H'11

% in Total

11/'10 %

502
406
144
112
109
129
107
82
99
55
24
16
9
1.797
5,92
4,26

28%
23%
8%
6%
6%
7%
6%
5%
6%
3%
1%
1%
1%

773
494
174
159
151
150
124
114
104
59
40
16
13
2.370
6,32
4,26

33%
21%
7%
7%
6%
6%
5%
5%
4%
2%
2%
1%
1%

54%
22%
21%
41%
38%
16%
16%
38%
5%
6%
67%
0%
40%
32%
7%
0%

Total expenses increased by 32%, mainly due to increase in fuel cost.

20

EBITDAR Margin %
30,0
22,3
20,0

17,2

20,2

22,9
16,5

15,9

10,0

Increase in fuel cost had a

negative impact on
EBITDAR.

14,9

AVG (2005-2010):19,2%
6,2

0,0
2005

2006

2007

2008

2009

2010

1H'10

1H'11

* AVG= Average Annual Growth Rate

(Mn)
Revenue
Net Income
Net Income Margin (%)
EBIT
EBIT Margin (%)
EBITDA
EBITDA Margin (%)
EBITDAR
EBITDAR* Margin (%)

2006
2.247
99
4,4
48
2,1
235
10,5
358
15,9

2007
2.734
149
5,5
285
10,4
490
17,9
610
22,3

2008
3.228
598
18,5
391
12,1
541
16,8
653
20,2

2009
3.271
260
7,9
355
10,8
571
17,5
751
22,9

2010
4.236
144
3,4
232
5,5
462
10,9
700
16,5

1H'10
1.857
115
6,2
60
3,3
170
9,1
277
14,9

1H'11
2.235
-248
-11,1
-135
-6,1
15
0,7
140
6,2

* Codeshare expenses are no longer included in Rent.

21

EBITDAR Margin % Comparison


20

18,3

15,9
13,8

15

11,8

10

10,0

8,1

6,2

5,8

4,7

3,5

0
LAN

SQ*

(Mn )
Revenue
Expense
Net Income
EBIT
EBIT Margin (%)
EBITDA
EBITDA Margin (%)
EBITDAR
EBITDAR Margin (%)

SAS

TK
2.235
2.370
-248
-135
-6,1%
15
0,7%
140
6,2%

UA

UA
12.499
11.914
226
584
4,7%
1121
9,0%
1471
11,8%

IAG

LH
11.490
11.729
-248
-239
-2,1%
571
5,0%
666
5,8%

AA
8.082
8.297
-501
-214
-2,7%
162
2,0%
382
4,7%

AF*

IAG
7.773
7.685
71
88
1,1%
579
7,4%
779
10,0%

TK

LH**

AA

AF*
6.220
6.365
-197
-145
-2,3%
261
4,2%
503
8,1%

SAS
2.234
2.180
19
55
2,5%
224
10,0%
308
13,8%

SQ*
2.007
2.001
25
6
0,3%
242
12,1%
319
15,9%

AY

LAN
1.871
1.726
79
145
7,8%
282
15,1%
342
18,3%

AY
1.080
1.148
-57
-68
-6,3%
-9
-0,8%
37
3,5%

* April-June 2011, 1Q results


**LH is based on airlines business only. Others based on Group Financials.
Source: Calculated based on web site & annual reports

22

PAX Per Personnel


1.000

892

829

800

Cost Per ASK ( Cent)


12

CASK

11,86

807

9,92

10

9,57

9,52

510

504

7,92

8
440

423
221

200

192

4
2

3,84

2,23

3,35
2,89

2,90
2,51

3,27
2,17
2,06

0
TK

UA

* April-June 2011, 1Q results

AA

LAN

AY

IAG

LH

7,40

7,35

6,87

6,32

400

SAS

Fuel/ASK

9,09

651

600

Personnel/ASK

SQ*

AF*

SAS

AA

AF*

UA

1,55

LH**

2,44

2,27

1,57 1,47

1,83

1,82

AY

LAN

IAG

2,77

1,02

SQ*

2,06
1,32

TK

* April-June 2011, 1Q results


**LH is based on airlines business only. Others based on Group Financials.

THY is the most cost efficient among its European Peers


23

Average Consumption
40
23.84 Litres/100 ATK
30

28,72

27,83

27,07

26,76

25,21

25,73

25,68

THYs fuel expense per ASK is


23,84

20

lower on the average compared to


its peer group.
Due to fleet expansion, the fleet

10

average age will be lower which in


return will increase THYs fuel
efficiency.

17% Reduction Since 2005

0
2005

2006

2007

2008

2009

2010

1H '10

1H '11

its young fleet and Fuel Saving


Program which started in April
2008, THY saved 6.495 tons of fuel
and reduced CO2 Emission by
20.459 tons.

Fuel Cost Per ASK ( Cent)


3,35

3,27
2,77

2,51

2,44

2,27

2,23

As of June 2011, with the help of

2,17

2,06

Fleet expansion will reduce


fuel cost as well as fleet age
0
AA

UA

SQ*

AF*

LAN

IAG

SAS

LH**

TK

* April-June 2011, 1Q results

**LH is based on airlines business only. Others based on Group Financials.

24

Revenue by Currency
USD; 15%

Other; 38%

THYs income is diversified

among the major currencies.

EURO; 34%

TRY; 13%

Expenses by Currency
Other; 7%

USD; 43%

Currency exposure risk


is minimized due to
efficient cash management

TRY; 39%
EURO;
11%

25

Winner of 3 awards at the 2011 World Airline Awards:


Best Airline Europe
Best Premium Economy Seats
Best Airline Southern Europe
Winner of Air Transport World-Market Leadership

Award 2011
Is the only 4 Star Airline in all categories in Europe

26

27

THANK YOU

Mr. Cokun KILI, CFO


Ms.Suna ELEB, IR Manager

Tel: +90 (212) 463-6363 x-13630

E-Mail: ir@thy.com

Assets ( Mn)
Cash and Equivalents
Net Trade Receivables
Other Current Assets
Total Current Assets
Net Fixed Assets
Other Long Term Assets
Total Long Term Assets
Total Assets

Liabilities (Mn)
Short Term Lease Obligations
Accounts Payable
Passenger Flight Liabilities
Other Current Liabilities
Total Current Liabilities
Long Term Lease Obligations
Retirement Pay Provision
Other Long Term Liabilities
Total Long Term Liabilities
Share Capital*
Restatement Effect
Restricted Profit Reserves
Differences from Currency Translation
Cash Flow Hedge Fund
Retained Earnings
Net Profit For the Year
Total Shareholders Equity
Total Shareholders Equity & Liabilities

2005
304
121
95
520
1.657
224
1.882
2.402
2005
113
161
149
332
755
540
72
249
861
110
1.180
5
0
0
-596
87
786
2.402

2006
197
135
241
573
1.667
155
1.822
2.395
2006
118
172
174
113
577
780
63
106
949
95
1.010
4
0
0
-336
97
869
2.395

2007
281
144
445
870
1.891
117
2.008
2.878
2007
132
213
222
127
694
918
77
109
1.104
103
1.017
36
0
0
-230
155
1.081
2.878

2008
236
163
825
1.224
2.362
110
2.471
3.695
2008
196
203
228
146
773
1.307
67
154
1.528
82
781
0
2
0
0
530
1.395
3.695

2009
505
205
585
1.295
2.227
445
2.672
3.967
2009
191
259
272
180
902
1.192
70
208
1.471
405
520
11
2
-1
399
259
1.595
3.967

2010
397
282
1.025
1.704
3.145
348
3.493
5.197
2010
241
359
329
311
1.240
1.798
83
247
2.128
488
548
19
2
8
624
140
1.829
5.197

1H'11
311
383
850
1.544
3.715
455
4.170
5.713
1H'11
286
384
560
358
1.588
2.525
80
149
2.754
426
478
17
4
11
666
-231
1.371
5.713

In converting the TRY reported results to EURO, year-end EURO exchange rates were used

29

Income Statement (Mn)

2005

2006

2007

2008

2009

2010

1H'10

1H'11

11/10 %

Operating Revenues

1.860

2.247

2.734

3.228

3.271

4.236

1.857

2.235

20%

Operating Expenses

-1.804

-2.199

-2.449

-2.837

-2.917

-4.004

-1.797

-2.370

32%

Operating Profit

66

48

285

391

355

232

60

-135

-324%

Income From Other Operations

255

153

127

30

42

75

38

31

-19%

Loss From Other Operations

-166

-34

-6

-111

-60

-65

-109

-17

-84%

Income Before Financial Income/(Expense)

145

167

407

310

337

242

-10

-121

1075%

-19

-16

-5

-71%

174

753

80

37

212

82

-61%

Income/Loss due From Asset Valuation


Financial Income
Financial Expense

-36

-62

-380

-376

-80

-77

-39

-269

597%

Income Before Taxation

109

105

209

688

343

184

147

-312

-312%

Taxation

-26

-6

-59

-90

-83

-40

-32

65

-300%

Net Income

83

99

149

598

260

144

115

-248

-316%

In converting the TRY reported results to EURO, the period average EURO exchange rates were used

30

TURKISH CARGO
Leading cargo carrier in total export and import

cargo in Turkey.

Operates 26 destinations with its 4 A310-300 and 2

A330-200F freighters besides 182 destinations with


174 passenger aircraft.

During 1H11 posted cargo revenue was 198

million Euro, carried cargo was 185.466 tons.

Revenue (Mn)
350
300
250

37%
201

206

2005

2006

2007

2008

2009

198

179

50

175

100

160

150

145

315

200

2010

1H'10

1H'11

31

THY -Cargo
International

400.000

Domestic

33.380

2005

2006

2007

37.732

2008

166.410

30.321

39.073

over the last two years. As of June 2011, 90% of


carried cargo was from the international segment.

132.197

161.158

145.149

126.492

114.653

100.000

201.402

200.000

Cargo carried in international lines is increasing

+% 22

274.266

(Tons)

300.000

As of June 2011, THY has carried total of

36.407

39.144

19.568

19.056

185.466 tons cargo, indicating 22% increase


compared to the same period of 2010.

2009

2010

1H'10

1H'11

THY, having 58% market share in Turkish cargo

market by the end of 2010, has increased its


market share to 64% as of June 2011.

Market vs THY
Turkish Market

THY

THY Market Share

600.000

64%

2005

2006

2007

2008

541.360

58%

60%

According to the Fleet Plan, decision made to

purchase 5 Airbus cargo aircraft, of which 1 of


them arrived in 2010 and another one in the first
half of 2011 .

185.466

289.072

40%
313.956

198.890

395.009

184.222

385.028

348.728

159.873

144.974

150.000

331.115

300.000

57%

238.060

48%

46%

44%

50%

418.038

(Tons)

450.000

80%

20%
0%

2009

2010

1H 2011

* Turkish market data provided by DHMI.

32

THY ACADEMY( To be Established)


One of the most outstanding training centers in the aviation industry.
Has been applying ISO 9001 Quality Management System since 1998.
Gives training services about 10.000 people each year with its trainers,

specialized in their areas.

Addresses the training needs of cargo and passenger agents,

universities and other airlines besides Turkish Airlines.

Turkish Airlines Flight Training Center offers Cockpit Crew

Training , Cabin Crew Training, Ground Training and Simulators.

Turkish Flight Academy


Founded on November 2004 as a result of a need for

new flight personnel for THY.

Started training with 16 pilot candidates on May

2006. So far, 66 students have graduated from the


Academy and started flying at Turkish Airlines.

Currently 110 pilot candidates are given training at

the Academy.

Giving 210 hours flight training and 1200 hours

ground training.

Turkish Airlines has the following simulators:


7 full Flight Simulators for RJ-100, B737-400, B737 800,

A320s, B777- 300ER, A330/340 aircraft

1 FNPT II MCC
3 Flight Training Devices for A320, A330/340 and B777
1 A320 Door Trainer
A340 Business class, B737 Economy Class Cabin

Service Trainer (CST)

B737/A310/A340 Cabin Emergency Evacuation

Trainer(CEET)

33

Owned

Year
Established

Paid-in Capital
(Mn.)

Revenue
(Mn. )

Net Profit/Loss
(Mn.)

THY Teknik A..

100%

2006

213,3

187,7

12,5

P& W THY Teknik Uak Bakm Merkezi Ltd. ti

49%

2008

90,8

37,8

10,2

Goodrich-THY Teknik Servis Merkezi Ltd. ti.

40%

2010

3,2

THY Do&Co kram Hizmetleri A..

50%

2007

12,8

87,4

6,0

Sun Express

50%

1989

33,5

263,4

( 9,6)

Bosna Hersek Havayollar

49%

1994

9,5

8,6

( 2,0)

THY Opet Havaclk Yaktlar A..

50%

2009

21,3

326,8

5,8

TGS Yer Hizmetleri A..

50%

2008

5,1

63,5

7,9

HABOM A..*

100%

2011

212,8

TCI Kabin i Sistemleri San. ve Tic. A..

51%

2011

3,2

Uak Koltuk retimi San. Ve Tic. A..*

100%

2011

21,3

Turkbine Teknik Gaz Trbinleri Bakm Onarm A..

50%

2011

7,1

1H2011

The Paid-in-capital converted by period-end EURO exchange rates; revenue and profit/loss amounts, converted by the period average EURO exchange rates.

* Capital Amount is based on Thousand Euro.

34

TURKISH TECHNIC
THY Teknik A..(Consolidated)
Owned 100% by THY.
During 1H11, posted revenues and net income was 188 mn and 12 mn

respectively.

Provides maintenance services to more than 100 customers, including international

airlines such as Lufthansa, KLM,BA and Alitalia as well as domestic airlines.

Main goal is to become one of the biggest MRO Center in the region.

HABOM (Maintenance Repair & Overhaul Center) Corporation


HABOM is established, in June 2011, with the capital of 500,000 TL as

HABOM Havaclk Bakm Onarm ve Modifikasyon Merkezi A.

HABOM Corporation plans to provide not only maintenance service to around

400 aircraft per annum, but also to provide training and other services to civil
aviation industry in Turkey and surrounding region.

Total investment will be around 400 mn$.


The facility which is designed according to LEED Gold standarts will be located in

Sabiha Gokcen International Airport in Istanbul.

First phase of the facility will be completed in the last quarter of 2011.

THY will be developing its technical


service and maintenance business
through the HABOM Project

HABOM expected to be in full capacity starting from the year 2012 and gradually by

the year 2022 expected revenue is around 6.5 bn$ .

35

TURKISH ENGINE CENTER


P& W THY Teknik Uak Bakm Merkezi Ltd. ti
In 2008, THY Technic and Pratt & Whitney signed a joint venture and

established Turkish Engine Center.

Owned 51% - 49% by Pratt&Whitney and THY Technic, respectively.


The field of activities are ; to provide engine maintenance, repair and

overhaul (MRO) services to customers located in Turkey, surrounding


regions and worldwide.

The new environmentally efficient CFM56 and V2500 engine overhaul

facility is planned to be comprised of approximately 25,000 sq. meters and


total usage area is 100,000 sq. meters located at the Sabiha Gken
International Airport.

The facility, is designed according to LEED (Leadership in Energy and

Environmental Design) Gold Standarts. Consequently, today the facility is


the first Industrial building that acquires this certificate in Turkey.

36

GOODRICH THY TECHNIC SERVICE CENTER


Goodrich-THY Teknik Servis Merkezi Ltd. ti
Founded in July 2010, owned 40% - %60 by THY

Technic and TSA-Rina Holdings B.V., subsidiary of


Goodrich Corporation.

Mainly focus on to provide excellent offer for Nacelle,

Thrust Reverser, and its components; repair, overhaul


and modification services for Turkish Airlines, other
customers from Turkish domestic and International
market with high quality, efficiency and best price level.

The facility is located in Gebze Organized Industrial

Zone. The indoor area is approximately 4.000 sq meters.

Components will be repaired/serviced by the company

37

THY DO&CO CATERING


THY Do&Co kram Hizmetleri A.. (Equity Pick-up)
Founded in 2007, Owned 50% - %50 by THY and

Do & Co Restaurants & Catering A.G.

Since 2007, operating nine gourmet kitchens all over

Turkey: Istanbul (Atatrk and Sabiha Gkcen), Ankara,


Antalya, Izmir, Bodrum, Trabzon, Dalaman and Adana.
Over 60 national and international airlines are catered
from these locations.

During 1H11, posted revenues and net income was

87 mn and 6 mn respectively.

Turkish Airlines won

award at 2010 World Airline


Awards, for the World's Best Economy Class
Onboard Catering, which is served by Turkish
Do&Co.

Turkish

Airliness Flying Chef Program, was


inaugurated on the airlines New York route in April
2010.

38

TGS Yer Hizmetleri A.. (Equity Pick-up)


Registered on August 28th, 2008 to Commerce

Registrary.

Owned 50% - %50 by THY and Hava Havaalanlar

Yer Hizmetleri A..

During 1H11, posted revenues and net income was

JP`B&H Airlines`d.o.o.Sarajevo (Equity Pick-up)


Owned 49% by THY.
Founded in 1994 as Bosnia Herzegovinas

national airline under the name B&H Airlines.

During 1H11, posted revenues and loss was 9

mn and 2 mn, respectively.

63 mn and 8 mn, respectively.

39

SUN EXPRESS
Sun Express (Equity Pick-up)
Founded in October 1989 as a subsidiary company of

Lufthansa and Turkish Airlines.

Owned 50% - 50% by THY and Lufthansa, respectively.


Market leader in charter flights between Germany and

Turkey.

Flies to/from 23 airports in Germany, 20 in Turkey and 51 in

other countries.

Fleet consisted of 25 B737 aircraft with total seat capacity of

4.725 as of June 2011.

Carried 3,377,255 passengers in first half of 2011, by

achieving load factor of 76.2%.

As of 1H11, number of personnel: 1.428


During 1H11, posted revenues and net loss was 263 mn

and 10 mn respectively.

40

TURKISH OPET AVIATION FUELS


THY Opet Havaclk Yaktlar A..
In terms of investment on jet fuel supply; Turkish

Airlines established a jet fuel supply company together


with local oil retailer OPET on September 2009.

Owned 50% - %50 by THY and OPET.


The business activity of the established company is to

supply jet fuel to any type of aircraft.

Started supplying jet fuel to THY for all domestic

airports as of July 1st 2011.

During 1H11, posted revenues and net income was


327 mn and 6 mn respectively.

41

In civil aviation, safety and quality supports each other and


quality systems aim to maintain develop safety as a whole.
Safety, as it would commonly be well appreciated and generally
accepted, is the key concept to consider for operations. Thus, Turkish
Airlines is determined to keep and develop highest safety standards.
Accepting and implementing the standards dictated by the aviation
authorities and manufacturers as the baseline, Turkish Airlines strives
to attain safer operational conditions in respect to continuous
development processes and appreciates this concept as a must.

Flight Safety:
The following have been implemented and monitored by utilizing the
quality system of Turkish Airlines;
Adoption of Safety Management System approach
Implementation of Flight Data Monitoring (FDM) system
Manage and assess the risk of flight operations
Publications to flourish a widespread culture for operational safety
The Flight Safety Department that has direct access to the Accountable
Manager is in charge of the management and oversight of the flight
safety. It also implements the Flight Data Monitoring System, makes
informal Line Observations and investigates the occurrences and
reports (mandatory/voluntary) to promote flight safety.

Quality System:
In accordance with JAR OPS 1, starting with the date of 1999, the
Quality Assurance
and Flight Safety Department, has been
inaugurated. Based on the requirement JAR OPS 1.035, Turkish
Airlines established a quality system dedicated to ensure safe
operational practices and airworthy aeroplanes. Our company is an
IOSA operator since 2005. Nowadays, we are preparing ourselves to
implement ICAOs Safety Management System and Security
Management System.

In addition to the aviation sector standards, Turkish Airlines adopted


generic standards for quality, such as ISO 9001 Quality
Management System, 14001 Environmental Management System,
OHSAS 18001 Occupational Health and Safety Management
System, ISO 27001 Data Security Management System and ISO
10002 Customer Satisfaction Management System. As a result,
Turkish Airlines quality system is an integrated approach covering
standards for aviation and generic systems.
Quality Assurance Directorate which is also reporting directly to
Accountable Manager is in charge of the implementation and
oversight of the quality system. The departments within this
directorate are; Flight Operations, Ground Operations, Technic,
Cabin, Flight Training, Quality Management and Improvement.
Turkish Airlines has a quality assurance program which consists of
all planned and unplanned audits that ensures all operational
activities to be carried out according to all aviation requirements,
standards and procedures. It has also a continuous process that
brings forward solutions and suggestions on potential nonconformities in the context of preventive action.
Due to its vast operation network, Turkish Airlines is in close contact
with numerous Civil Aviation Authorities and subject to their audits.
These audits, as well as giving the opportunity to the auditors to
evaluate the current situation, provide the necessary feedback for
Turkish Airlines continuous safer operations.
In addition to above all, having all requirements fulfilled and systems
in place with regards to Turkish Civil Aviation Law, Turkish Airlines
has the AOC (Air Operator Certificate) approved by Turkish Civil
Aviation Administration (CAA).

42

This presentation is confidential and does not constitute or form


part of, and should not be construed as, an offer or invitation to
subscribe for, underwrite or otherwise acquire, any securities of
Turkish Airlines A.O (the Company) or any member of its group
nor should it or any part of it form the basis of, or be relied on in
connection with, any contract to purchase or subscribe for any
securities of the Company or any member of its group nor shall it
or any part of it form the basis of or be relied on in connection
with any contract, investment decision or commitment
whatsoever. This presentation has been made to you solely for
your information and background and is subject to amendment.
This presentation (or any part of it) may not be reproduced or
redistributed, passed on, or the contents otherwise
divulged, directly or indirectly, to any other person (excluding the
relevant persons professional advisers) or published in whole or
in part for any purpose without the prior written consent of the
Company.
This presentation includes forward-looking statements. These
forward-looking statements include all matters that are not
historical facts, statements regarding the Companys
intentions, beliefs or current expectations concerning, among
other things, the Companys results of operations, financial
condition, liquidity, prospects, growth, strategies and the industry
in which the Company operates.

By their nature, forward-looking statements involve risks


and uncertainties, including, without limitation, the risks and
uncertainties set forth in the Companys Offering
Memorandum, because they relate to events and depend
on circumstances that may or may not occur in the future.
The Company cautions you that forward-looking statements
are not guarantees of future performance and that its actual
results of operations, financial condition and liquidity and
the development of the industry in which the Company
operates may differ materially from those made in or
suggested by the forward-looking statements contained in
this presentation. In addition, even if the Companys results
of operations, financial condition and liquidity and the
development of the industry in which the Company
operates are consistent with the forward-looking statements
contained in this presentation, those results or
developments may not be indicative of results or
developments in future periods. The Company does not
undertake any obligation to review or confirm analyst
expectations or estimates or to release publicly any
revisions to any forward-looking statements to reflect
events that occur or circumstances that arise after the date
of this presentation.

43