Research Update: Turkish Airline Turk Hava Yollari 'BB-' Rating Affirmed, Off Watch Negative On Improved Credit Metrics; Outlook Stable

After a challenging 2016, Turkish airline Turk Hava Yollari A.O. (THY) reported solid operating results for full-year 2017, resulting in improved credit measures. We believe THY's solid EBITDA performance will likely continue in 2018, as strong pre-bookings indicate good conditions in the Turkish tourism industry. We consider that, as a result, THY's stand-alone creditworthiness has improved. This offsets our view of the Turkish government's reduced capacity to offer extraordinary support to THY following our downgrade of Turkey earlier this year. We are therefore affirming our 'BB-' long-term issuer credit rating on THY and removing the rating from CreditWatch negative. The stable outlook reflects our expectation that THY will post resilient earnings in 2018, as revenue improvements from a sustained recovery

...+ After a challenging 2016, Turkish airline Turk Hava Yollari A.O. (THY) reported solid operating results for full-year 2017, resulting in improved credit measures. + We believe THY's solid EBITDA performance will likely continue in 2018, as strong pre-bookings indicate good conditions in the Turkish tourism industry. + We consider that, as a result, THY's stand-alone creditworthiness has improved. This offsets our view of the Turkish government's reduced capacity to offer extraordinary support to THY following our downgrade of Turkey earlier this year. + We are therefore affirming our '##-' long-term issuer credit rating on THY and removing the rating from CreditWatch negative. + The stable outlook reflects our expectation that THY will post resilient earnings in 2018, as revenue improvements from a sustained recovery in traffic and yields will counterbalance higher fuel prices and capital spending. This should support stable financial metrics, including adjusted funds from operations...

Research Update