(Bloomberg) -- Turkish Airlines reported third-quarter profit that beat expectations as cargo operations and reductions in staffing costs boosted earnings. The shares soared the most in eight months.
Net income at Turkey’s flagship carrier was 6.3 billion liras ($563 million), according to a statement on Thursday, 35% higher than the top of a range of analyst estimates. That compared with a loss of 946 million liras in 2020, when much of global travel was grounded due to the Covid-19 pandemic.
The results are the latest sign that the aviation industry is recovering quickly from the coronavirus crisis, with both Deutsche Lufthansa (DE: LHAG ) AG (OTC: DLAKY ) and Air France-KLM reporting healthy figures and outlook in recent days. The dropping of border restrictions by most governments outside Asia has led to a surge in pent-up demand, while the opening of key transatlantic routes starting next week is expected to give another boost.
Turkish Airlines is among carriers to have taken advantage of a booming freight business even while passenger travel has been subdued. The company is looking to spin off its cargo operations into a separate unit to unlock value for investors and to have a more efficient management.
Cuts in staff expenses to below 2019 levels due to salary reductions and the depreciation of the Turkish lira also buoyed the earnings, the company said.
Turkish Airlines (IS: THYAO ) rose as much as 8.1%, the sharpest intraday gain since March 2, to 16.84 liras, the highest in almost three years.
The carrier’s results showed a “positive surprise in its unit costs, driven mainly by lower personnel expenses, which looks more sustainable than our initial expectations,” Gorkem Goker, an analyst at Istanbul-based brokerage Yapi Kredi Yatirim, said in an emailed note. He raised his recommendation on the stock to buy from hold.
“We also welcome the strength in the company’s cargo business, whose outlook is the foremost exciting part of Turkish Airlines’ near-term story,” he said. That performance “eases our concerns for the weakness in passenger front.”
The airline serves one of the largest networks in the world with 333 destinations in 128 countries.
(Updates with share price in sixth paragraph, comment in seventh, eighth.)
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