Turkish Air Advances to Week-High as Oil Slumps: Istanbul Mover

Turk Hava Yollari AO (THYAO), Turkey’s flagship carrier, advanced to the highest level in a week on speculation a drop in oil prices bodes well for its earnings.

Shares of Turkish Airlines, as the carrier is known, rose 1.7 percent to 7.18 liras at the close in Istanbul, gaining for a second day. Brent crude traded 1.2 percent lower at $99.15 a barrel, extending its loss in the past five days to 6.7 percent.

“The correlation between Turkish Airlines shares and oil increases at times when there are abrupt changes in oil prices such as this,” Ozgur Goker, an analyst at Yapi Kredi Yatirim in Istanbul, said in a phone interview today. “Now that oil is below $100, we see a positive impact on shares.”

Passenger traffic climbed by an annual 26 percent to 10 million in the first quarter, Turkish Airlines said in a statement to Borsa Istanbul today. Load factor, a measure of occupancy, rose 5.1 percentage points to 77.9 percent, it said. Turk Hava on March 15 reported a net income of 1.13 billion liras ($630 million) for 2012, beating the average estimate of 1.05 billion liras in a Bloomberg survey of 21 analysts.

The Bloomberg World Airlines Index rose 1.5 percent, increasing for the first time in three days. The capitalization- weighted gauge of the leading airlines stocks in the world lost 1.8 percent in the two days ended yesterday.

Goker has a hold recommendation on the stock, with a 12- month price target of 7.7 liras. Sixteen analysts recommend buying the shares, while nine say hold and one recommends selling, according to data compiled by Bloomberg.

Turkish Airlines trades at 7.7 times its estimated 12-month earnings, according to data compiled by Bloomberg. That compares with a 5.5 multiple for Russia’s OAO Aeroflot, 9.1 for United Arab Emirates’ Air Arabia PJSC (AIRARABI) and 9.9 for Germany’s Deutsche Lufthansa AG. (LHA)

To contact the reporter on this story: Taylan Bilgic in Istanbul at tbilgic2@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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