Pegasus, the rapidly expanding Turkish low-cost carrier, has seen its pre-tax loss for the first half of the year balloon to TL264m ($90m) - roughly ten times worse than its H1 2015 result.
A string of terrorist attacks plus a breakdown of relations with Russia and an attempted coup have been catastrophic for Turkey’s tourism sector, with arrivals in June down 40 per cent on the previous year.
Nonetheless, Pegasus has managed to boost passenger numbers by nine percent in the first half, although most of that growth stemmed from domestic traffic.
However, passenger numbers haven’t kept pace with capacity increases, leading to a two percentage point fall in load factor.
Going forward the airline expects to receive nine narrowbodies in 2016, eight in 2017 and 10 in 2018 as deliveries gradually ramp up for an 80-aircraft order stream that includes 75 A320neos.
“Despite the challenging conditions the tourism sector has experienced in 2016 we at Pegasus never wavered from our growth targets or the belief in our country, working harder than ever to ensure that, despite the fall in demand on some of our routes, we achieved robust growth in our key target areas including for overall guest numbers, number of flights and turnover,” commented Pegasus CEO Mehmet Nane.
Keeping to those targets has meant slashing prices, so overall sales rose only a small amount despite almost a million more passengers in the first half of the year.
Unsurprisingly, though, costs have grown significantly as Pegasus keeps on adding aircraft; staff and operating lease expenses, for instance, both climbed nearly 50 per cent.
For now, these expenses are being partially offset by cheaper fuel, but the airline’s bullish plans assume a return to some kind of normality in Turkey.
But as long as Syria burns on its border that will probably be out of reach, while the Erdogan government’s hard-line response to an attempted coup – which includes aspersions that it was encouraged by Western powers – won’t help restore the country’s appeal to tourists.