Turkey’s wealth fund is in talks to provide emergency funding to Turkish Airlines, one of the country’s hardest-hit companies that saw business plummet after the coronavirus pandemic halted nearly all flights, four sources told Reuters news agency.
The sources, who are close to the matter, said the company could receive capital or financing support, though nothing had been finalised yet.
It was unclear how much funding the Turkey Wealth Fund (TVF) could make available in what one source called a “bailout”. The TVF declined to comment.
In a statement to the stock exchange, Turkish Airlines said the company had not received any information regarding talks being conducted for the provision of capital or financing support to the company.
Turkish Airlines flies to more destinations worldwide than any other airline, but measures restricting movement in the wake of the pandemic have led to big losses, layoffs and closures at airlines around the world. One of the biggest, Germany’s Lufthansa, agreed a $10bn government bailout in June.
Turkish Airlines posted a loss of 2.23 billion lire ($287m) in the second quarter when lockdowns at home and abroad were most widespread. It has agreed with a labour union to cut wages by 30 to 50 percent until the end of 2021 but has avoided layoffs.
“It is very clear that Turkish Airlines is in need of a bailout programme. This could be capital support or financing support,” one of the sources said.
The source added that the TVF conducted a broader study of struggling Turkish companies in the transport and tourism sectors, suggesting other bailouts could be forthcoming.
The TVF owns 49.12 percent of Turkish Airlines, which has a market capitalisation of 14.6 billion lire ($1.9bn). Its shares have dropped 31 percent since borders were temporarily closed and domestic and international flights were halted after February. They rose 2.5 percent after the funding news on Friday.
Chairman Ilker Ayci said after the second quarter the airline felt “very comfortable” with the $1.7bn of cash on hand, credit lines and other funding capacities it had until the beginning of 2021.
But it expects to burn up to $350m per month through yearend, when net debt is expected to be some $14bn.
Finance Minister Berat Albayrak, announcing the government’s three-year plan on Tuesday, said the recovery in some sectors including tourism and transport had not reached the desired levels.
Another source told Reuters efforts were being made for a similar style rescue for Turkish Airlines to Lufthansa.
“A sort of capital transfer or providing financing will be possible. Talks are now being held for this and the ideas for the method are being evaluated,” the source said.
The company’s passenger numbers tumbled 65.9 percent year-on-year in August, company data showed. Its load factor dropped 17.2 percentage points to 67.6 percent in the same period.