THYAO: European Expansion Will Drive Long-Term Upside Despite Higher Discount Rate

Analysts have slightly lowered their fair value estimate for Türk Hava Yollari Anonim Ortakligi from approximately ₺586 to ₺580, citing expectations of modestly slower revenue growth, compressed profit margins, and a higher discount rate that more than offset the impact of a richer projected future P E multiple.

What's in the News

• Board approves withdrawal from Air Albania partnership, with plans to sell Turkish Airlines' entire 49 percent stake and provide further updates as the process advances (regulatory filing)
• Exit from Air Albania follows a strategic shift toward new European opportunities, including a recently signed EUR 300 million minority investment deal in Spain's Air Europa, largely via a capital increase (company announcement)
• New interline and codeshare agreements with Air Transat take effect, enabling single ticket and through check in for itineraries that combine both airlines' flights between Canada, Turkiye, and key long haul destinations (Air Transat announcement)
• Codeshare partnership with Air Transat begins on Toronto to Istanbul routes, with an additional Thursday frequency from May 28, 2026, raising service to three weekly flights (Air Transat announcement)
• Company formally denies media reports that it is negotiating to acquire all shares of SunExpress, stating there has been no change in the joint ownership structure with Deutsche Lufthansa (Borsa Istanbul filing)

Valuation Changes

• The Fair Value Estimate has been reduced slightly from TRY 586 to TRY 580, reflecting modestly less optimistic assumptions.
• The Discount Rate has risen moderately from 39.8 percent to 42.0 percent, increasing the required return applied to future cash flows.
• Revenue Growth has been trimmed slightly from 10.47 percent to 10.19 percent, signaling a marginally slower expected top line expansion.
• The Net Profit Margin has fallen meaningfully from 8.94 percent to 7.67 percent, indicating expectations of compressed profitability.
• The future P/E multiple has increased from about 19.3x to 22.3x, partially offsetting the negative impact of weaker growth and margins on the valuation.