Turkish Airlines plans to carve out short-haul brand AnadoluJet into a standalone company as demand rebounds from the coronavirus crisis.
The unit is currently flying with occupancy levels approaching 90%, compared with around 80% for the group as a whole, making it ripe for expansion, Turkish Airlines Chairman Ahmet Bolat said Tuesday in an interview.
“Under current market-demand dynamics it is much easier to spin off AnadoluJet as a separate unit to boost its growth,” Bolat said in Istanbul at an International Air Transport Association conference.
The new company would initially be 100% owned by shareholders of Turkish Airlines, in which the state has a 49% holding, though the spinoff would make a future stake sale, listing or other fund-raising move faster and easier.
Shares of Turkish Airlines rose as much as 7.7% and were trading 5.8% higher as of 3:43 p.m. in Istanbul. The stock’s value has increased more than fivefold this year.
AnadoluJet was founded in 2008 and operates a fleet of 63 narrow-body planes, more than 50 of them Boeing Co. 737-800s, supplemented by more modern 737 Max jets originally destined for Russia’s S7 before it was sanctioned after the invasion of Ukraine. It also has a handful of Airbus SE A320neos.
AnadoluJet, which has operated somewhere between a discount carrier and a regional airline, has its main base at Sabiha Gökçen airport on the Asian side of Istanbul and serves mainly domestic destinations, though Bolat said it will add more routes to European cities following the spinoff.
Plans for a similar separation of the Turkish Airlines cargo operation have been slowed, however, the executive said, reflecting waning investor interest in the sector, so that a spinoff would deliver only “marginal contribution.”
The business ranked fourth in the world among freight operations at passenger airlines in 2021, according to IATA, behind the cargo arms of Qatar Airways, Dubai’s Emirates and Korean Air Lines Co.
Turkish Airlines, or Turk Hava Yollari AO, will increase frequencies to North America, the fastest growing part of the overall business, according to Bolat, who spoke at IATA’s Wings of Change Europe event. The market contributed 22% of revenue in the third quarter, up from 15% pre-pandemic.
Asia traffic, which the company links with the rest of the world via an Istanbul hub offering more destinations than any other airport, is yet to pick up, though there are signs of recovery, especially in China and Japan, Bolat said.
“We have been diverting our business to other areas as Asia still lags far behind the global recovery,” he said.
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