Istanbul’s new airport is boosting a budget airline instead of Turkish Airways
Istanbul’s new airport was meant to benefit Turkey’s flag carrier, but it boosted its budget rival instead. Pegasus Hava Tasimaciligi AS stock has outperformed Turkish Airlines by more than 95 percentage points this year. The divergence is being amplified by bets that it stands to gain amid setbacks that have plagued its rival, which is now flying primarily from a new airport 20 miles outside the city centre. Istanbul Airport -- the new $11b Turkish Airlines hub opened in April on the foggy Black Sea coast -- has been mired by reports of diverted flights, delays and long taxi times on its runways that threaten to eat away at the carrier’s earnings. That’s been a boon for Pegasus, as passengers looking to avoid any inconvenience are now choosing Sabiha Gokcen International Airport, Istanbul’s second outlet on the Asian side of the city, where the company operates the bulk of its flights. While the travails for Turkish Airlines are likely temporary, “Sabiha Gokcen’s strategic importance has increased,” said Behlul Katas, an analyst at Yatirim Finansman, an Istanbul-based broker, citing the distance that passengers have to travel to reach Istanbul Airport and concerns over the costs the flag carrier needs to assume at its new hub. He has an outperform rating on both Turkish Airlines and Pegasus stocks. In the first five months through May, passenger traffic at Sabiha Gokcen rose 2% compared to the same period a year earlier while international passengers surged 19%, according to data from the Turkish airport authority. Traffic at Istanbul Airport and the retired Ataturk Airport combined fell 4% over the period, with international passengers rising a mere 0.3%. The trend is as encouraging for Pegasus as it is ominous for Turkish Airlines. With a footprint larger than Manhattan, Istanbul Airport is designed to handle 90m passengers a year by 2020 and is integral to Turkish Airlines’s bid for expansion. Turkish Airlines has discounted the potential risks “perhaps more than any other in the market,” said Julian Rimmer, a trader at Investec Bank in London. He said the stock’s stellar performance last year aggravated its drop.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2019-06-19/star/istanbul2019s-new-airport-is-boosting-a-budget-airline-instead-of-turkish-airways
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Istanbul’s new airport is boosting a budget airline instead of Turkish Airways
Istanbul’s new airport was meant to benefit Turkey’s flag carrier, but it boosted its budget rival instead. Pegasus Hava Tasimaciligi AS stock has outperformed Turkish Airlines by more than 95 percentage points this year. The divergence is being amplified by bets that it stands to gain amid setbacks that have plagued its rival, which is now flying primarily from a new airport 20 miles outside the city centre. Istanbul Airport -- the new $11b Turkish Airlines hub opened in April on the foggy Black Sea coast -- has been mired by reports of diverted flights, delays and long taxi times on its runways that threaten to eat away at the carrier’s earnings. That’s been a boon for Pegasus, as passengers looking to avoid any inconvenience are now choosing Sabiha Gokcen International Airport, Istanbul’s second outlet on the Asian side of the city, where the company operates the bulk of its flights. While the travails for Turkish Airlines are likely temporary, “Sabiha Gokcen’s strategic importance has increased,” said Behlul Katas, an analyst at Yatirim Finansman, an Istanbul-based broker, citing the distance that passengers have to travel to reach Istanbul Airport and concerns over the costs the flag carrier needs to assume at its new hub. He has an outperform rating on both Turkish Airlines and Pegasus stocks. In the first five months through May, passenger traffic at Sabiha Gokcen rose 2% compared to the same period a year earlier while international passengers surged 19%, according to data from the Turkish airport authority. Traffic at Istanbul Airport and the retired Ataturk Airport combined fell 4% over the period, with international passengers rising a mere 0.3%. The trend is as encouraging for Pegasus as it is ominous for Turkish Airlines. With a footprint larger than Manhattan, Istanbul Airport is designed to handle 90m passengers a year by 2020 and is integral to Turkish Airlines’s bid for expansion. Turkish Airlines has discounted the potential risks “perhaps more than any other in the market,” said Julian Rimmer, a trader at Investec Bank in London. He said the stock’s stellar performance last year aggravated its drop.<br/>
