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Turkish Air passengers to climb as network expands

Load factor seen stable as capacity grows.

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January 13, 2011 2:17 by



Flag carrier Turkish Airlines  targets revenue of 11 billion lira ($7 billion) and passenger growth of 20 percent in 2011 as it widens its long- haul network, Chief Executive Temel Kotil said in an interview.

The growth in passengers, among the fastest in Europe, is due to gains in transit traffic, which now accounts for a third of international fares, Kotil told Reuters late on Wednesday.

The Istanbul-based company in recent years has rapidly expanded its fleet and added new destinations to its schedule to grab market share from European and Middle Eastern peers.

The carrier is entering far-flung markets like Guangzhou, China and Los Angeles in the first quarter and will add at least eight more medium and long-haul spots later in 2011.

“We offer an alternative in markets where we are a new player,” Kotil said, adding the company would remain competitive in fares to attract new customers despite any rise in costs with the new entries.

“We are able to cover new trans-Atlantic destinations because of the number of our eastbound routes, and we cover new destinations in the Far East with strong European legs.”

Kotil added that the load factor, which measures the capacity used by passengers, will remain almost unchanged at 73.8 percent. It was 73.7 percent in 2010.

The fleet will grow to at least 175 planes from 153, he said.

Shares in Turkish Airlines, in which the state retains a 49 percent stake, rose 1.54 percent to 5.24 lira, outperforming the benchmark index’s  0.91 percent rise.

Last week, investment banks including Citigroup  and HSBC  bid to advise on a privatisation strategy, which could include a second public offering.

Kotil declined to comment on the government’s plans to sell part or all of its stake.

SHORT OF TARGET

Turkish Airlines fell short of its target of 31 million passengers in 2010, posting growth of 16 percent to 29.1 million people, according to a stock-exchange filing on Thursday.

Passenger capacity, or available seat kilometres (ASK), will reach 84 billion from 65 billion last year, up 29 percent, and revenue passenger kilometres (RPK) will reach 62 billion from 47.9 billion last year, Kotil said.

“The main driving force in increased capacity is our-long haul network,” he said. “This much of an increase in RPK and ASK shows our long-haul network is more mature and complete.”

But medium-haul remains a priority, he added.

“Our focus on Europe continues … We are increasing our destinations there by almost 10 percent from 68 to 74.”

Cargo capacity alone will double, Kotil said, but he declined to give a target for revenue from the freight business.

Kotil would not comment on plans for overseas acquisitions and said the company will continue to focus on “organic growth”.

The carrier expects the price of oil to remain stable this year. It will continue to hedge 20 percent of fuel costs and has no plans at present to increase the amount it hedges, he said.

Talks were continuing with Hava-Is, the aviation workers union, over a wage dispute with employees at THY Technic, the airline’s maintenance unit, to avert a strike, Kotil said.

THY Technic workers there have threatened to strike later this month, Hava-Is Chairman Mustafa Yagci told Reuters.

Turkish Airlines plans to spend 100 million lira on advertising, including sponsorship, this year, Kotil said.

It has inked deals with top European soccer clubs Manchester United and Barcelona. NBA star Kobe Bryant, guard for the Los Angeles Lakers, in December signed an endorsement deal with the carrier.

(Editing by Hans Peters)



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