Pegasus saw strong demand recovery in Q2 but weak euro hits bottom line

Turkish budget carrier Pegasus saw international capacity and traffic exceed pre-Covid levels in the second quarter of this year, as leisure demand in particular “outpaced initial expectations”. That development helped the carrier to a E28m operating profit for the three months to 30 June, Pegasus said on 15 August, with strong demand momentum expected to continue through the rest of the year, amid a “significantly improved outlook for operating profitability” and “strong peak season yields”. A net loss of E40m for Q2 was partly blamed on an “unrealised FX loss of net E45m”, however, as the euro weakened against the US dollar. Nevertheless, record Q2 revenue of E504m was 24% up on the same period in 2019 and reflected high yields and a “robust” ancillary performance, the Istanbul-based carrier states. It came despite overall passenger numbers being at 88% of 2019 levels on capacity at 110% on the same basis. International seats made up 56% of Pegasus’ total during the period, with the 3.8m passengers transported on such services marking a 200,000 uplift from 2019 levels. Domestic passenger numbers were, however, down 1mn at 2.8m on the same basis. A Q2 domestic load factor of 78% and an international one of 79% compared with 92% and 83% respectively in the same period of 2019. Pegasus notes that an 81% increase in fuel expenses drove a 129% year-on-year increase in overall costs, pushing cost per available seat kilometre up 27% compared with 2019. The carrier generated E160m in cash during the quarter, leaving its cash reserve – after deducting bank loans and debt instruments – at E237m, up from E77m at the end of the first quarter. Full-year capacity is forecast to come in at 5-10% above 2019 levels.<br/>