In the seasonally weak quarter, THY's results came operationally in line with expectations with TL20.6bn EBITDA whereas net income of TL8.9bn beat expectations widely by 44%. Higher than expected net other income and net investment income as well as quarterly positive tax figure of TL170mn played a role in the bottom-line surprise. Results include normalisation impact both on top-line and expenses thus relatively lower operating margins y/y as expected. 4Q22 financials include revenues of TL88bn (+139% y/y), other income exc. adj EBITDA of TL20.6bn (+83% y/y) and net income of TL8.9bn (+351% y/y). Carrier's results call is today at 17:00 local time and bear importance for colour on the possible outlook since the carrier does not share official guidance and fleet plan. We maintain our Outperform rating and TP of TL189/share.
4Q22 revenues increased by 44% y/y in USD terms and also surpassed pre-Covid 4Q19 level by 46%. When compared to 4Q21, pax and technical revenue increased by 96% and 62%, respectively whereas cargo revenue shrinkage was 36%. 4Q22 pax and cargo revenues surpassed 4Q19 figure by 42% and 73%, respectively. Yield and demand improvement were strong. Passenger RASK increase was up by 32% and overall RASK was up by 38% supported by cargo operations. Regions' share in 4Q22 total pax and cargo revenue implies that Europe, Asia/Far East and Americas topped the list with respective shares of 30% (4Q19: 28%), 23% (27%) and 20% (15%).
4Q22 expenses increased by 51% y/y in USD terms and was 32% above pre-Covid 4Q19 levels: In the quarter when ASK increase compared to 4Q19 was 7%, fuel expense was 62% above 4Q19. Personnel, pax services&catering, and maintenance were up by 40%, 23% and 19% above 4Q19. Compared to 2019, 4Q22 ex-fuel CASK (adj for cargo) was up by 12% and CASK (adj for cargo) rose by 24%.
4Q22's other excluded EBITDA margin became 23.4% down by 717bps y/y due to extraordinarily high base.
Equity-pick up investments' consolidated impact on PL was positive TL315mn similar to 4Q21 level.
Net investment income became TL2.4bn up by 350% y/y thanks to higher investment incentive income and financial investment income. Furthermore, net other income was TL1.2bn up by 131% y/y mostly attributable to FX gains from operational activities, manufacturer's credits and insurance, indemnities, penalties income.
Net financing expense was TL6.6bn versus 4Q21's TL5.3bn. Despite switch to net FX gains, higher interest expenses and derivative losses brought about higher net financing expense.
4Q22's effective tax rate was positive 2% compared to 4Q21's negative 11%. FY 2022 effective tax rate was 8% versus 2021's 11%.
THY's end-2022 fleet included 394 aircraft (220 FL/ 86 OL/ 88 owned) versus end-3Q22's 390 aircraft (221 FL/ 78 OL/ 91 owned) and end-2021's 370 aircraft (225 FL/ 73 OL/ 72 owned). 2022 entries included 6 A350, 8 B737-8 MAX, 13 A321 NEO, 3 A320 NEO and 1 B787 Dreamliner. Average fleet age stood at 8.7 years. 2023 hedge level is 8% at break-even price of USD76/bbl.
Lower net debt/EBITDAR: As of end-2022, carrier's total financial lease liability was USD9.1bn (51% EUR, 29% USD, 19% JPY, 1% CHF). At end-2022, the carrier's net debt became TL175bn up by 7% q/q up y/y implying net debt/trailing other exc. EBITDAR of 2.2x (end 3Q22: 2.3x/ end-2021:5.5x) as per our calculations.
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THYAO TI: 4Q22 Review (Oyak Yatırım)
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