Failed Turkish coup piles pressure on travel companies

Celebi Hava Servisi AS

19/07/2016 14:31

* Searches for holiday home rentals plunge 
    * Turkish Airlines and Pegasus unlikely to hit targets 
    * Tour operators may have to cut prices 
 
    By Ceyda Caglayan and Victoria Bryan 
    ISTANBUL/BERLIN, July 19 (Reuters) - The attempted coup in 
Turkey last week has dealt another blow to the country's already 
weakened tourism industry and will weigh on profits of the 
nation's airlines and airports as well as tour operators serving 
the country, industry experts said.  
    Turkey's tourism sector has taken a battering this year 
after a wave of suicide bombings. Even ahead of the attack at 
Istanbul's Ataturk airport at the end of last month economists 
forecast that tourism revenue would drop by about $8 billion 
this year, equivalent to 1 percent of GDP. urn:newsml:reuters.com:*:nL8N19K1EU 
    Holiday rentals website Tripping.com said that searches for 
accommodation in Turkey dropped 37 percent last weekend compared 
with the previous weekend. 
    Market research company Euromonitor predicts that 
international arrivals to Turkey will drop to 32.9 million this 
year, from 34.7 million in 2015 and a peak of more than 35 
million in 2014. 
    "The recent political events in Turkey will be catastrophic 
for its travel industry," Euromonitor's Nadejda Popova said. 
    In June alone, international air passenger arrivals dropped 
by 29 percent, bringing the decline for the first half of 2016 
to 12 percent.  
     
    STAY-AWAY PASSENGERS 
    The declining tourist numbers are likely to be most painful 
for Turkish Airlines  THYAO.IS  and budget carrier Pegasus 
 PGSUS.IS , as well as airport operator TAV  TAVHL.IS  and 
airport service company Celebi  CLEBI.IS . 
    Shares in those companies have fallen by between 25 percent 
and 35 percent already this year.  
    Efe Kalkandelen, airlines analyst at IS Investment, said he 
now expects total air passenger numbers to Turkey to drop by 4-5 
percent this year, against his previous estimate of a 5.2 
percent increase. 
    The drop in international passengers is of particular 
concern because they typically generate greater profit than 
domestic passengers, he said.  
    International passengers accounted for 87 percent of Turkish 
Airlines' 2015 passenger revenue and 61 percent at Pegasus. 
    Turkish Airlines' greater proportion of transit passengers 
could provide some support, Kalkandelen said, but neither of the 
two carriers are likely to hit year-end targets.  urn:newsml:reuters.com:*:nEMN2CC4CA 
    Turkish Airlines, which was downgraded by ratings agency 
Standard & Poor's this month, aims to carry 72.4 million 
passengers this year, up from 61.2 million in 2015, and achieve 
a margin of 20-22 percent on earnings before interest, tax, 
depreciation and rentals (EBITDAR). 
    Pegasus is targeting passenger growth of 13-15 percent from 
a 2015 level of 22.3 million people and an EBITDAR margin of 
19-21 percent. 
     
    PRICE CUTS? 
    The turmoil has already led to the insolvency of Anatolian 
Sky, which specialised in holidays to Northern Cyprus and 
Turkey. Shares in London-listed TUI  TUIT.L  and Thomas Cook 
 TCG.L , two of Europe's largest tour operators, have come under 
pressure from events in Turkey as well as attacks in France and 
Britain's vote to leave the European Union.  urn:newsml:reuters.com:*:nL8N1A436N  
    Some operators may now find themselves having to cut prices 
for late summer holidays, Numis analyst Wyn Ellis said.  
    Thomas Cook has cut capacity to Turkey by about a third this 
year, but Ellis said its exposure is still likely to be 
"uncomfortable".  
    TUI had moved to focus more on exclusive hotels, which tend 
to be booked earlier, so its late summer bookings could be 
better, Ellis added. 
    Thomas Cook said that cancellations after the failed coup 
had been minimal, though large numbers of customers had called 
to seek reassurance. 
    A spokesman for TUI said that Turkey may yet prove to be a 
popular last-minute destination because prices were good and 
many other places are fully booked.  
 
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
Turkey vows to remove Gulen movement "by its roots" after failed 
coup     urn:newsml:reuters.com:*:nL8N1A5276 
Turkish tourist arrivals mark biggest drop in at least 22 years  
   urn:newsml:reuters.com:*:nL8N19K1EU 
Attacks, coup, Brexit spell summer chill for UK tour operators   
  urn:newsml:reuters.com:*:nL8N1A436N 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Reporting by Ceyda Caglayan in Istanbul and Victoria Bryan in 
Berlin; Editing by David Goodman) 
 ((victoria.bryan@thomsonreuters.com; +49 30 2888 5169; Reuters 
Messaging: victoria.bryan.thomsonreuters.com@reuters.net 
Twitter:@vl_bryan)) 
 
Keywords: TURKEY SECURITY/TOURISM