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Turkish Airlines Stock Falls After Second-Quarter Loss Is Double Estimates
Turk Hava Yollari (THYAO) AO, the carrier known as Turkish Airlines, declined in Istanbul after losses in the second quarter, driven by higher leasing costs, were more than double estimates.
Turkish Airlines fell as much as 2.5 percent to 2.35 liras, the lowest intraday level in a week. The share dropped 2 kurus, or 0.8 percent, to 2.39 liras at the 12:30 p.m. close of trading, extending losses this year to 47 percent.
“The bottom line remained significantly below expectations as a result of massive foreign exchange losses from financial leases,” Is Invest, Turkey’s biggest broker, said in an e- mailed report today.
The loss in the three months to June was 220.6 million liras ($126 million) compared with a profit of 165.7 million liras in the same period of last year, Turkish Airlines said in a filing with the Istanbul Stock Exchange after markets closed on Aug. 26. The company was expected to lose 101 million liras, according to the average of 11 analyst estimates compiled by Bloomberg.
Turkish Airlines is expanding its network of routes into regions such as Africa and buying more planes to grab market share from rivals including British Airways. The lira declined 5 percent against the dollar and 7.6 percent against the euro in the second quarter, making planes leased in dollars and euros more expensive.
Financial expenses surged to 423.3 million liras from 34.9 million liras in the second quarter of 2010, Turkish Airlines said. Sales rose 34 percent to 2.8 billion liras, it said.
The company expects a profit this year, chief executive Temel Kotil said in an interview last month. The company hasn’t revised its budget for 2011 after political upheaval in the Middle East and North Africa reduced seat demand, he said.
“Operational difficulties should relatively ease with stronger seasonality and lower crude price levels in the third quarter,” Is Invest said. “On the other hand, the strong dollar versus lira will continue to pose a threat on net income in the upcoming second half of the year.”
To contact the reporter on this story: Mark Bentley in Istanbul at mbentley3@bloomberg.net
To contact the editor responsible for this story: Mark Bentley at mbentley3@bloomberg.net
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