Turkish Airport Operator Drops as Profit Slump Deepens on Unrest

Updated on
  • TAV Havalimanlari shares fall the most in 2016 on local index
  • Earnings fall as tourist industry is hit by terror attacks

Turkish airport operator TAV Havalimanlari Holding fell after the company reported its biggest decline in quarterly profits since at least 2008 as the country’s tourist industry was battered by terror attacks.

TAV Havalimanlari’s stock declined as much 2.9 percent after the company said its second-quarter net income plunged 67 percent from the same period last year to 55.3 million liras, about a third of the mean estimate in a Bloomberg survey of 13 analysts. The operator runs Istanbul’s main airport, where an attack by three suicide bombers with alleged links to Islamic State killed about 40 people in June.

Increased security fears have crippled tourism in Turkey, with foreign tourist arrivals to the nation falling for an eleventh straight month in June, the longest losing streak on record, according to data from the culture and tourism ministry. The loss in tourism may deepen after an attempted coup on July 15 prompted the government to declare a three-month state of emergency.

“The operator has not found any replacement for its flagship asset for the midterm,” said Berk Ozbek, an analyst at Istanbul-based Global Securities, said in an e-mailed research report. “Weaker than expected bottom-line and operating profitability might create a negative impact on the share performance.”

Istanbul’s Ataturk Airport generates almost 50 percent of TAV Havalimanlari’s total revenue. The company sees a 20 percent decline in Ataturk Airport direct international passengers. It also sees a “significant” drop in net income for 2016 from a previous growth estimate of as much as 12 percent.

The company’s shares closed down 2.4 percent in Istanbul, for a year to date decline of 40 percent, the steepest among Borsa Istanbul 100 Index members.