Turkish Airlines' 9 Billion Lira Buyback: A Bold Bet on Value and Resilience

Turkish Airlines (THYAO.IS) has unveiled a landmark three-year share buyback program worth up to 9 billion Turkish Lira (approximately $234 million USD), signaling unwavering confidence in its strategic vision and shareholder value. This move, the airline’s most aggressive capital allocation initiative in years, positions it at the forefront of regional aviation recovery while addressing undervaluation concerns. But what does this say about management’s strategy, and how do the risks stack up against the rewards?

A Strategic Play to Counter Undervaluation

Turkish Airlines’ stock has faced headwinds in recent quarters, with political volatility and currency fluctuations weighing on investor sentiment. The buyback program, which targets up to 1.7% of its issued share capital, is a direct response to this undervaluation. At its April 2025 market capitalization of $11.29 billion, the 9 billion Lira buyback represents a bold 2.1% of its total valuation—a clear statement of management’s belief in the stock’s intrinsic worth.

The program builds on earlier buybacks executed in March 2025, which already reduced shares outstanding by 0.418%, underscoring a disciplined approach to capital allocation. By reducing the float, Turkish Airlines aims to boost earnings per share (EPS) and stabilize its stock price amid macroeconomic turbulence.

Aligning with Regional Recovery and Cargo Dominance

The buyback isn’t just about stock price support—it’s a strategic bet on Turkey’s economic rebound and the airline’s dominance in cargo logistics. Turkish Cargo, the airline’s freight division, reported a 35% surge in revenue in 2024, solidifying its position as one of the world’s top three air cargo operators. With passenger capacity projected to grow 6-8% annually to over 91 million passengers by 2026, Turkish Airlines is leveraging its Istanbul hub to capitalize on Middle Eastern and European travel demand.

Risks on the Horizon: Currency and Politics

The program isn’t without risks. Turkey’s economic challenges—high inflation, a weakening lira, and geopolitical tensions—remain significant overhangs. The Turkish Lira has lost nearly 9% of its value against the USD in 2025 alone, amplifying debt servicing costs for companies with dollar-denominated liabilities.

Yet Turkish Airlines’ cash reserves and strong cargo margins provide a cushion. With net profit margins of 10.5% and a 25.3% EBITDA margin in 2024, the airline has the financial flexibility to navigate these headwinds.

Why Act Now?

The buyback’s timing is strategic. With shares trading at a 20% discount to their 2023 highs and geopolitical risks priced in, the stock offers a compelling entry point. Management’s dual focus on buybacks and dividends—$260 million in payouts planned for 2025—creates a total shareholder return package unmatched in the region.

Investors should also note the airline’s fleet expansion, including new Airbus A350-900s, which improve fuel efficiency and operational resilience. Combined with its cargo dominance, Turkish Airlines is primed to capitalize on post-pandemic travel rebound and Middle Eastern economic growth.

Final Analysis: A Buy for the Brave

Turkish Airlines’ 9 billion Lira buyback isn’t just a financial maneuver—it’s a vote of confidence in its ability to navigate Turkey’s choppy waters. While risks persist, the stock’s valuation, dividend support, and exposure to regional recovery make it a compelling contrarian play. For investors willing to tolerate near-term volatility, this is a chance to own a key player in one of the world’s fastest-growing aviation markets.

Act now—or risk missing the takeoff.