Uh Oh: Turkish Airlines CEO Resigns… Good Luck To His Replacement!

Turkish Airlines has had a very rough year, largely through no fault of their own. In late June several explosions went off at Istanbul’s Ataturk Airport, and then a couple of weeks later there was an attempted military coup.

Tourism in Turkey was already way down due to general safety concerns before these two things happened, and the recent situation has only made things worse. Add in the fact that Turkey’s currency is quite weak, and I don’t envy the jobs of those in charge of the airline.

Turkish Airlines lost ~$617 million in the first half of 2016 year. The airlines’ value proposition is that they fly to more countries than any other airline in the world, so they do need an extensive route network. At the same time it seems like the only way they can control their losses is to reduce capacity. The airline has announced some mild capacity cuts, though they haven’t announced plans to reduce their growing fleet of ~300 planes.

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Management shake-up at Turkish Airlines

It was announced today that Turkish Airlines’ CEO, Temel Kotil, is resigning, and he will be taking a job as the head of Turkish Aerospace Industries. He has been in charge over the airline for over a decade, though I sure can’t blame him for wanting to pursue something different.

Interestingly Turkish Airlines’ new president will be Bilal Eksi, who is currently the head of Turkey’s civil aviation authority. He worked for Turkish Airlines until 2011, though has worked for the government for the past five years. While Turkish Airlines is partly government owned, appointing a government official as the head of the airline is an interesting move.

I don’t know enough about the politics of aviation in Turkey, so I can’t really say whether that’s a good or bad move. What I will say is that historically government run airlines sure have had a hard time turning themselves around, so hopefully that’s not the case here.

Bottom line

Turkish Airlines is very much fighting an uphill battle, as they have so many things working against them, from a weak currency to weak tourism to weak demand over safety concerns. Good luck, and here’s to hoping the new CEO leads the airline in the right direction.

What do you make of Turkish Airlines appointing the head of the civil aviation authority as the new CEO?

Comments

  1. Days are tough ahead for Turkish Airlines, as it will never be able to grab a sizeable chunk of passengers from India, which are the reason for ME3 success.
    Indian authorities will not allow it to fly to any city other than Delhi and Mumbai, because of Turkish govt’s closeness with Pakistan.

    Other than India, I don’t see any other possible market for Turkish which it could bet on.

  2. My wife and I are in a houston and have looked at several options flying Turkish through IST to get to Israel and Europe. As remote as the chance is, we just aren’t willing to risk flying through IST…

  3. The CEO is simply being moved from one state enterprise to another. The other potential job for him was as head of Telecom. With his background as an aeronautical engineering leading Turkish Aviation Industries is a great match for him. He already sat on their board of directors.

    Incoming new CEO for TK is also a well known person as former VP at TK who left to become head of civilian aviation authority in 2011.

  4. I flew them about a month ago from IST to LHR. Great airline/product. Not expensive – round trip was just over $230 USD in coach. Nice staff, good onboard hard and soft product. I wouldn’t hesitate to fly them again. They even served a good meal .. probably why they’re loosing money 🙁

  5. International pax traffic has plunged by 19% since April 2016, 20-30% since May 2016. International load factors down to 73.4%. Deferred 167 aircraft deliveries. No CEO wants their reputation attached to a sinking vessel. The new CEO needs more than luck to turn around the enormous debt the airline incurred to acquire enough birds to total 436 by 2022.

  6. @Abhinav
    UAE (along with Saudi Arabia) are closest friends of Pakistan, and no countries government is as close to Pakistan government, as UAE’s. Yet airlines from UAE have no problem flying to several cities in India.
    Your reasoning does not add up.

  7. Before reading any comments, I had the same thoughts as Abhinav.
    I do not want to go off tangent too much here — but let me say that Erdogan’s government has done some things related to India and its neighborhood (including Bangladesh — see, for example, 1971 war crimes and Turkey’s condemnation of penalties for the criminals) that make it a near certainty TK will not expand in India.

    Note that UAE is a different issue. For one thing, there are thousands of Indian citizens in the UAE (and, Saudi Barbaria). This is not a factor in dealing with Turkey. Further, Turkey has recently needlessly interfered to irritate India. In contrast, the UAE has done some things that have improved relations with India.

    Sorry for the tangent. But I suspect this may be an issue that is relevant not just to India, but some other countries too — Erdogan has acted in ways that make people think he dreams of restoring Ottoman empire, and that does not always play well.

  8. Especially @MFT — If anyone wants to hear a rant on flying Turish through IST to TLV, I’ve got one! Never again will I get on a Turkish flight nor return to IST. I’m sure Turkey is a lovely place to visit, but my blood pressure is rising just thinking about the nightmare we had last year.

  9. Instead of speculating about their financial situatuation based on food served (?), I’d recommend reading the IFRS based financial statements. For 2015 they reported a profit after tax of USD 1069m, which is slightly above 10% of their revenue – and excellent result in the airline industry (and despite – or because of – serving good food …). Now in 2016, due to the sad events we all know about, they turned into red ink reporting a half yearly loss of USD 647m, which is about -14% of their revenue, a very significant loss, indeed. However THY is quite cash and equity strong, and also the Cash Flow from Operating Activities remained positive at 625m (half year 2015 at 1025m). So there’s no immediate danger to the company, although (new) management obviously needs to address the issue.

  10. “The airlines’ value proposition is that they fly to more countries than any other airline in the world, so they do need an extensive route network”

    Seems like a missed opportunity for TK to advertise itself in conjunction with the latest Tom Hanks film “Inferno”. What an awfully good way to spread a modern plague than from the home base of an airline that flies to more countries than any other airline in the world :p

  11. India-UAE relations are at an all time high. Abu Dhabi’s crown prince will be the chief guest in India’s Republic day celebrations on 26 January 2017. This is also expected to send a stronge message to Pakistan.

  12. The “several explosions” were from a terrorist attack. I live and work in Turkey and was caught out of the country when it happened. Please do not minimize that incident with a vague description.

  13. @Manu: No, I think the new CEO stands for continuity. As a matter of fact, many (including me) think a phase of consolidation will actually be beneficial.
    @MFT: I don’t think that transiting through IST is particularly risky. IST has totally three checkpoints and the terrorists were actually caught (and blew themselves up) at the second one. The transit zone is entirely behind the third checkpoint. In comparison, any EU airport (except BRU for the same sad reason) only has one checkpoint. Personally I still do transit through IST and feel safe doing so.

  14. This year my wife and I were in “Eastern Europe” for a period and had multiple flights with Turkish Airlines. I can only compliment them on their service. It did not matter how short or long the flight, all were full service.
    This included LHR – IST, IST – ADB, IST – ATH return and IST – ZAG. The planes, the staff – all were great, in fact our Australian carriers could do well reviewing Turkish Airlines service.
    My only regret was that we shortened out stay in Istanbul as a result of the bombing in the city. I will return, however that is off topic.
    I will use Turkish Airlines again, without hesitation.

  15. That sounds like bad news to me, especially combined with the loss/firing of their CFO in recent months.

    It’s not just that Temel Kotil has been running Turkish as it rose from nothing to a serious world player. It’s also that so much of his skill has been negotiating the delicate balance between state and business. He’s avoided the usual flag-carrier trap of getting pulled into money-losing prestige routes. Turkish has also positioned itself very skillfully around the new Istanbul airport: they aren’t financially involved or even legally committed to fly from there, so they can benefit if it works out and keep clear of the swamp if it doesn’t.

    Having somebody from government running the airline seems worrying. I’d watch out for signs of the new CEO placating the government — if he does, Turkish Airlines’ next decade might be much worse than the last one

  16. I had the pleasure of Meeting Dr Tamel Kotil twice, Once in Karachi(2007) and once at Istanbul(2012) in my capacity as Chairman of Pakistan-Turkish Business Council.

    I found him a True Professional who had firm commitment to Turn Around Turkish Airlines to its highest peak. With his hard efforts, the Flights to Karachi increased first to One daily and than Twice daily in addition to Daily flights to Lahore.

    Turkish Airlines is an excellent Airline with very courteous Service,Pleasant Air hostesses, good meals and accurate Timings. I travel frequently on TK to and from Istanbul, and would love to continue travelling.

    Lets not bring Politics in the preferences of Airlines and only confine to Comfortable Travel preferences,

    My Good wishes to Bilal Eksi Bey who is also a Professional related to Aviation.!

  17. Congratulations and best wishes to Mr Bilal Eksi!

    The problem with Turkish Airlines flights to India is that the ground staff is rude, arrogant and totally devoid of Customer Service concept. The top two guys (a woman and the fat short guy full of themselves) need outright sacking whereas the rest will require some serious training.
    I was supposed to fly Delhi-London on 9 November ’16, but was not only unceremoniously off loaded, but also left without any assistance with no connectivity, food or water (not even a glass of water for medication) for almost 24 hours.This is in stark contrast to service one gets by the ground staff of Turkish Airlines at Ataturk Airport. I cannot understand why Turkish Airlines would allow such unacceptable behaviour of its staff at Delhi terminal.

  18. Hi,
    It’s disappointing to hear that commenters are playing down Turkish Airlines and trying to link it with the Government, Ottoman Empire, LOL .. Turkey is going through a rough time, it’s not easy Terror is Terror, we are all affected by this today their was a shooting in America Airport only today 5 people killed does it mean everybody will stop flying, and it doesn’t not mean I will not fly to America, as this will be you giving in to Terrorist your life will be manipulated and controlled by these thugs and terrorists, As for India Turkey does not have any issues with India, being friends with Pakistan doesn’t mean they have any issues with India does it?. Turkish airlines is just a business just like any other airline you can’t knock an airline which has has been chosen “Europe’s Best Airline” at the Skytrax World Airline Awards, we’ve also been given the “Best Airline in Southern Europe,” “Best Business Class Airline Catering” and “Best Business Class Lounge Dining” awards.

    Terror can hit any airline any country I would feel the same as I would for Turkey, being half Turkish I fly with then for 20 years from UK and haven’t had any major issues which haven’t been resolved.

    I think everybody need to stand together and unite against terror, don’t give up peace

    Regards
    Hicks

  19. Customer service for Turkish airlines sucks. I forgot my carryon and my ipad on turkish airlines from Mumbai to SF via Istambul . I realized it on the terminal and turkish customer service would not do anything about it . I finally had to open a lost baggage report at my final destination SFO, which I am not sure is even lost baggage as it was a carryon.
    After one week of trying to get the answers from their customer service which is in Romania, I was told that they could not find my items . Case closed.

    If they give me this kind of service when I fly business class , I wonder what kind of service I get in Economy.
    BAD, BAD …. Probably will never fly turkish airlines again… and will recommend people not to fly turkish airlines

    Tracking number of my case … if anyone from Turkish airlines read this .. 2017004766

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