Ladies and gentlemen, welcome to the Turkish Airlines Q3 2022 conference call and webcast. I'll now hand you over to our speakers, Associate Professor Murat Şeker, member of the board and the executive committee, as well as the Chief Financial Officer, and Mehmet Fatih Korkmaz, the Head of Investor Relations. Speakers, the floor is yours.
Thank you very much, and good afternoon to everyone. Welcome to the presentation of our results for Q3 of 2022. It's a pleasure to meet with all of you again. As our chairman mentioned to you on our previous call, we organized a non-deal roadshow in New York in September, and we met with the global investors, had a chance to discuss our recent performance along with our future strategy. Their feedback and appreciation were quite valuable to us. In the near future, we will visit other financial centers around the world to get in touch with you more frequently. I will address our strategy targets and growth areas in these meetings with you. Now, allow me to go through the highlights of Q3 of 2022.
Apart from continued geopolitical conflicts and escalated fuel prices, Q3 was mainly characterized by strong demand for travel, met with operational difficulties, especially in Europe. While industry-wide disruptions effectively capped our peers' capacity, we carried out operations in Istanbul smoothly. This allowed us to benefit from the strong passenger and cargo demands. Our operational reliability, readiness, and vast network, combined with the robust demand, enabled us to conduct a profitable operation. As a result, we are happy to present you our strongest Q3 results. Turkish Airlines continued to stand out among its peers, increasing its global market share. As of Q3, we are the world's biggest network carrier in terms of available seat capacity on international flights. Also, our low-cost brand, AnadoluJet's international seat capacity, surged by more than four times. Q3 was successful for the whole Turkish aviation sector.
The industry continued its recovery by reaching 95% of the pre-pandemic passenger numbers in September. Istanbul Airport was the busiest airport in Europe, welcoming almost 20 million passengers during the quarter. The airport was the only major European hub where passenger volume exceeded pre-pandemic level. Antalya Airport was also among the top airports in Europe, ranking seventh in terms of passenger numbers in this quarter. As shortcomings related to airport operations and workforce put significant pressure in the industry, we differentiated ourselves from our peers with operational reliability and on-time performance. Our flight cancellation rate of 0.3% was almost five times lower than the European average of 1.7%. Together with our high-quality service offer, our passengers showed their appreciation through Skytrax as we were named as the best airline in Europe. Going forward, we will continue to run reliable and high-quality operation.
Substantial increase in passenger traffic alongside resilient cargo demand led to significant improvement in our financial performance compared to pre-pandemic levels. Highest quarterly revenue of $6.1 billion recorded in Q3, surpassing 2019 level by more than 50%. Increase in revenues, along with the cost discipline, we were able to alleviate negative impact from the escalated fuel prices. As a result, we realized around $1.4 billion profit from main operations and $2.1 billion EBITDA with 35% EBITDA margin. Our net income was $1.5 billion. This marked our fifth profitable consecutive quarter, showing the underlying strength and high potential of Turkish Airlines. In the first nine months of 2022, our liquidity continued to improve, and our cash and equivalents reached $4.5 billion.
Turkish Cargo performed well as we recorded around $900 million of revenue. Increased utilization of belly capacity strongly contributed to the profitability. To sustain our growth in cargo, we are introducing new products, focusing more on niche cargo segments, and facilitating more strongly the efficiency brought by our new cargo terminal in Istanbul Airport, SmartIST. The trajectory of our passenger revenue remains positive. In the last quarter of this year, we expect to increase our capacity between 5%-10% compared with the same period of 2019. In the meanwhile, we are carefully monitoring global travel demand, macroeconomic environment, and the geopolitical risks. Regarding to the future of our sector, lack of sufficient aircraft and engine availability is going to pose an important constraint on growth.
Furthermore, under inflationary pressure and possibility of negative demand shocks, cost-efficient and structurally sound airlines with well-diversified networks will be able to weather any negative macroeconomic development. To conclude, I would like to thank to all of our stakeholders for the trust they place in Turkish Airlines. We are quite happy to reciprocate their trust with a strong financial and operational performance. Now, I'll let Mr. Korkmaz to continue with the presentation and elaborate on some of the key results.
Thank you, Murat , and good afternoon, everyone. I would like to start with Q3's capacity development to give you further detail about our results. After a strong first half performance, we continued to increase passenger capacity in parallel to the robust demand environment. Our system-wide capacity surpassed 2019 levels by 16% in Q3, 4 percentage points higher than Q2. Capacity increase is mainly driven by international operations, which remains substantially above European and global averages as a proportion of the pre-pandemic levels. Additional frequencies, along with the extended summer season due to the shift in passenger preferences, we were able to capture even more demand. Operational disruptions in Europe and flight restrictions also drove greater demand towards Turkish Airlines. Growing popularity of Türkiye as a global touristic destination increased our local traffic as well.
These factors result in 2 percentage points increase in our total load factor and more than 15% increase in our passenger use compared to 2019. On a regional perspective, Americas continued to be the top performer in terms of increasing passenger numbers and capacity. Demand in Middle East was also fully recovered, as recurrence of pilgrimage travel to Saudi Arabia supported the traffic. Since our capacity was ready to serve pent-up demand in the Far East, lifting restrictions in Q3 resulted in gaining market share in new routes. For example, our interline passengers from Australia rose by 40% compared to 2019, increasing our load factors in Singapore, Kuala Lumpur, and Bangkok by around 20%.
Since the beginning of Q4, our passenger sales remain strong as it is still 40% higher than 2019 levels. We also observe structural shifts in the booking curve, which becomes more flatter with fewer peaks for both weekends and holidays. This allows us better revenue management and more efficient use of our capacity, leading to higher yields and profitability. We are also closely monitoring our bookings and other leading indicators to see if there are any signs of weakening passenger sentiment. As a side note, I also would like to give you details about our two new strategies. First one is introducing a new wave structure for our Far Eastern flights by adding mid-afternoon bank. This will provide better connection times for our flights to and from Europe and North America, enhancing our connectivity and aircraft utilization.
By doing so, we will deepen our presence in our existing markets and gain market share as we will grow competitiveness through better use of our network. Additionally, starting from this winter season, we are going to let these three of our Boeing 777 aircraft to the biggest Indian carrier, IndiGo. This collaboration will significantly increase our presence in India, one of the fastest growing aviation markets in the world, and feed our international network. As passenger operations gain strength, percentage contribution of cargo revenues to our total revenue base normalized from the peak level attained during the pandemic. In Q3, cargo revenues recorded at around $880 million and constituted 14% of our revenues. Even though air cargo in Q3 was resilient, we observed that the global cargo demand is under pressure.
Macroeconomic uncertainty and tighter financial conditions, along with easing supply chain bottlenecks and port congestion, resulted in declines in global cargo indices recently. Increased availability of ocean capacity, coupled with higher inventory levels, are freeing up additional freight capacity as well. Up until now, air cargo revenues affected to a lesser extent from these developments, as its relative pricing compared to the sea freight is still lower than pre-pandemic levels. In the upcoming quarters, we might see further deterioration in the supply-demand balance across the cargo industry due to increased availability of belly capacity related to reopenings in Asia and increased container ship deliveries in 2023. For us, current strength and profitability of our passenger operations sufficiently compensate and anticipate the weakness in the cargo segment.
As a result, we are not expecting a material margin deterioration in the near- term for our overall operations. Let us now head to the financial highlights. As you can see, our cash position increased by around $1.8 billion in the first nine months of this year to almost $4.5 billion. Going forward, we will continue to manage our liquidity carefully, considering the demand environment, our leverage, and CapEx needs. As visualized in the left bottom chart, strong operational cash inflow helped reducing net debt to $8.1 billion as of September 30. We decreased our net debt by $6 billion from its peak at the end of 2020. Currently, our LTM net debt EBITDA stands at 1.7 times compared to 3.4 times at the end of last year.
This marks the lowest level of leverage in the last 10 years. As a result of the faster than expected recovery, we are revising our year-end leverage target downwards from 2.5-3 times to 2-2.5 times. Next, allow me to talk about the key financial and operational data. Increasing passenger yields along with the high volume led 45% higher passenger revenues in Q3 compared to the same period in 2019. Together with the contribution of resilient cargo operations, our total revenues exceeded 2019 level by 52%. Net income realized around $1.5 billion, substantially better than our pre-pandemic profitability. Strong operational performance translates into 35% EBITDA margin, up almost three percentage points over 2019.
Looking at the unit expense breakdown compared to 2019, we recorded around 19% increase during Q3. This was mainly driven by higher fuel expenses in relation to escalated fuel prices. Our ex-fuel CASK, on the other hand, decreased by 5% on the back of higher capacity and productivity. Personnel CASK is still below 2019 levels, mainly due to depreciation of Turkish lira against hard currencies. Turkish lira depreciation also played a positive role in reducing passenger services and catering expenses, as most of our operations are located in Turkey. Our unit ground handling costs increased by around 17% in Q3 due to increase in unit prices and personnel bonuses paid to our subsidiaries. 20% decrease in sales and marketing costs is mainly attributable to reduced advertising spending, as current demand environment does not require additional stimulation.
Our fuel expenses increased by around $1 billion in Q3 compared to 2019 due to higher price and consumption. We have been experiencing an increased pass-through ability of fuel costs to ticket prices as demand remained robust. In the last quarter, we were able to reflect almost 50% of our fuel expenses surcharges. As you remember, this ratio was around 45% in Q2. On top of that, around $50 million of hedge gain allowed us to mitigate some portion of the negative impact from elevated price levels. Our hedge ratio for the remainder of the year is around 26% with a break-even price of $72. As you'll recall, we paused hedging in February due to relatively high Brent prices. Going forward, we are considering adding new positions depending on price and volatility levels.
We are continuing to invest in AnadoluJet in order to lower its cost base and attain higher utilization with diverse networks. With 11 new generation aircraft additions in the first nine months of this year, AnadoluJet almost doubled its international capacity compared to last year. Similarly, number of international passengers more than doubled, reaching to 5.3 million in the same periods. In the following quarters, AnadoluJet will continue to grow its network in Europe, the Middle East, and Turkish republics. Additionally, we will launch new products to expand its customer base and ancillary offerings to enhance profitability. Now, I will briefly talk about our full year expectations. Thanks to our flexible operating structure, we were able to adjust capacity efficiently throughout this year. After seeing October traffic results and current forward bookings, we are confident about the demand strength for the remainder of the year.
As a result, our capacity in Q4 is expected to be around 5%-10% higher than 2019. Similarly, for the full year, our capacity will be around 69% higher than 2019. On the cost side, our ex-fuel cost target is lower than 2019. We expect CapEx to be realized around $4 billion-$4.5 billion, including aircraft, engines, spare parts, and other fixed investments. We see sustainability as one of our main pillars in our growth strategy. Our modern fleet and carefully designed sustainability initiatives are the keys in lessening our environmental impact. Also, we recently joined UN Global Compact, the world's largest corporate sustainability initiative, to concentrate our efforts further.
Working with zero waste policy and sustainability, we have committed to a number of projects such as biofuel usage and carbon offset program in order to combat climate change by decreasing our emissions. In addition, last month, we signed global SAF declaration, which aims to completely decarbonize sustainable aviation fuels. As a result of our efforts, we have been recognized as the most sustainable flag carrier airline by World Finance, one of the foremost organization in international finance world. We will continue our endeavors with a perspective that protects both the present and the future. This concludes our presentation, and we can now continue with the Q&A session.
Thank you very much, gentlemen. Yes, ladies and gentlemen, just a note, there are no audio questions today. No audio questions, just written questions. If you would like to ask a question, of one of our speakers, please just type your question into the Ask a Question text area and then click the Submit button. Once again, no audio questions, just written questions. Just pop those into the Ask a Question text area and then click the Submit button. Speakers, I hand it over to you now to see if there are any written questions coming through. Do you have any?
Thank you, Rob. Murat, our analysts are wondering about which factors led to better than expected financial results in this quarter.
Well, there is definitely more than a single factor here. Actually, especially in Q3, we saw a very strong comeback on the passenger revenue side. Q2 was showing some signs that the demand, especially the direct demand to Turkey, could be strong, but Q3 showed a strong boost. As a result of which, the minister of tourism revised the total number of tourists that we expect to come to Turkey for this year. H e increased the number to 50 million, which is almost on par with the 2019 levels. The incoming tourist demand, leisure travelers to Turkey, was a big determinant of the strong financial results.
The transit network, as most of our peers in Europe, as we expressed throughout the presentation, had operational issues. We continue to be a good connector throughout the world between the east and west, to the United States and the Far East after it opened for operation. This helped us to have the passenger yields around 20% higher than 2019 levels. On the cargo side, even though we were starting to see some drops in the cargo yields, we could sustain our cargo yields because, again, the same reason, having a vast network, availability of higher belly cargo capacity, helped us to keep the cargo yields intact. Further on the cost side, ex-fuel CASK decreased compared to the same period of 2019 by about 5 percentage points. These three factors led the strong financial results of Q3.
Murat, in Q3, problems in the European airports were on the headlines. How these problems affected Turkish Airlines, and was there any monetary impact of these disruptions on our operations?
As we have explained this in our earlier call of Q2, we did not lay off any worker through the pandemic. Preserving our pilots and keeping them ready for flight helped us a lot through this strong demand environment. The negative effect of the disruptions in Europe on our operations remained relatively limited. I say relatively because as we have a big network and hub-and-spoke system, as our aircraft's operation started very high on-time performance rates. Throughout the day, we could have some delays, some cancellations led by the disruptions in Europe, but they did not have major negative impact on the operation. Just to put it into some perspective, in Q3 of 2019, the operational irregularity cost expenses was about TRY 15-20 million in 2019 Q3.
This year, in 2022 Q3, these expenses was about $25 million-$30 million. It had a limited effect on our overall operation.
Regarding demand from Europe, how do you see the flow will be in the upcoming quarters, given the problems in energy security and potential decrease in purchasing power?
This is a little early to have a very clean expectation about the demand from Europe. Although we have certain signs of the slowdown of economic activity on the PMI numbers are slow, inflation is still pressing and energy crisis is out there. A s we are in November now, we are still seeing a compared to the November of the earlier years, a relatively strong month. Strong winter is ahead of us. How long this is going to last is uncertain. We do have some expectations that Q1 of next year could be a little lower than we anticipated initially in the middle of this year. We know that international market capacity in Europe currently is about like 20% below 2019 level.
Having seen our performance in Q3, lack of capacity in the market drove greater demand to Turkish Airlines. Our load factor increased as a result of this by about 3 percentage points compared to 2019. This happened on top of increasing the capacity in the region by about 10%. Q3 did not reflect any uneasiness in the region. However, of course, we'll be very carefully monitoring the developments for Q1, especially of next year.
Are you expecting to experience any positive impact from World Cup?
To a limited degree as being a big network carrier, definitely we will be flying the travelers to Qatar. We will also put additional demand for the World Cup month. As we believe Gulf carriers are going to plan to channel their capacity from the Far East to the Middle East region to serve the surge in demand throughout the event, we will be able to gain some additional markets by focusing more on the Far East region to fill the gap.
For next year, I think the main question will be about our pilot base and aircraft availability. What is the current situation on the pilot base?
This year, even though our number of pilots were sufficient to run an operation without much cancellations, we had to cancel some flights because demand was much more than we could manage with our existing cabin and cockpit size. As a result of this, we are increasing recruiting new pilots. We will be also recruiting new cadets from our pilot school. By the end of this year, roughly we will be getting 300 captain first officers and some will be the cadets. Next year, we are planning to get additional 800-1,000 pilots, including them in the fleet. Of course, we're not going to do this at once. While monitoring the demand environment, we will be increasing our pilot size.
Murat, can you comment on the operating environment and forward bookings?
As I was saying in the earlier question, in this year September, October, we, in Europe and Middle East regions, recorded highest increase in load factors compared to the levels of 2019. Coupled with the unit revenue increase, Americas overall whole regions shows a very strong revenue growth. The Far East region opened up very late, but the load factor in the last month of Q3 in September was higher than 2019 level. Yields were also higher than 2019 level. We were seeing the recovery all around the world. Looking at the forward reservation, we are anticipating a relatively well-managed winter season ahead of us, Christmas season ahead of us.
Regarding domestic markets, what percentage of the domestic tickets are sold on price caps? How about the average ticket price change?
The ticket prices, domestic ticket prices increased twice throughout the year, and it reached about TRY 1,100 levels. As the local demand was also very strong, we sold more than 60% of the domestic tickets in the capped price overall in Q3, actually, especially in the July and August months, this went up more than 70% levels. In 2019, in Q3, this was about 30% level. Domestic yields also increased in this year by about like 10% compared to 2019 level in dollar terms, which was helped by the international flights, plus there was more business class sold in domestic market as well.
Murat, regarding our outlook, before we go into the details, our analysts are wondering about any guidance for next year for demand revenue yields environment. I think we could begin with capacity expectations for this year and maybe any guidance regarding next one.
Overall, we expect to have an ASK growth of about 8%-9% on the top of 2019 level. Earlier, we were expressing this could be higher than 10%, but the limitations, the cancellations that came through, operational disruptions in Europe prevented this, and captain shortage also prevented this growth. Overall, we might finish the year with about 7%-8% ASK growth. The yields overall, as we saw in Q3, in the first nine months, had about 20% growth. We are expecting to finish the year with higher than 20% yield growth of this year. Last quarter, we might be adding by 7%-9% ASK growth on the top of 2019. Next year, we are still working on it.
It's the difficult question that stems from how many aircraft that we have already ordered we'll be able to enter the fleet. Currently, with the operating leases, we have more than 30 aircrafts that we are planning to include in the fleet, some for AnadoluJet and some for TK. However, there are some delays in deliveries. That delay is going to be a key determinant of how much capacity we will be able to put. In a very big ballpark figure, it might be a low double-digit ASK growth, which will be a little bit more clear once we have more elaborated analysis of our 2023 budget.
Görkem from Yapı Kredi asked about what percentage of your capacity will be from new destinations in 2023.
For next year, most of the capacity growth will come from additional frequencies, as we'll be getting a large number of wide-bodies. If I'm not mistaken, about 12 wide-bodies will be entering the fleet. With the help of these, we are planning to add a second bank to our network connecting the Far East all the way to the Americas. Rather than opening up new destinations, most of the capacity growth is going to come from increasing frequencies, b ut we are not going to stop, of course, opening up new destinations. In the U.S., we are planning to open Detroit.
In Japan, we are planning to open Osaka, which we used to fly in the past, and in Tokyo at the second airport, Haneda, to our operation. Overall, about 15%-12% of the capacity is going to be dedicated to domestic market, and the rest will go for the international market.
Analyst from TEB and İş Yatırım is curious about any color on guidance for this year and the next regarding financial ones.
Financial ones, actually the first nine months is already a strong reflector of how the year is going to turn around. After the end of Q3, October and November, the traffic continued to be strong, which we announced. W e have already shared the traffic for October. On the revenue front, we might end up having a revenue increase overall by about more than 20%-25%, by the end of this year. As of course, the revenue increases, the EBITDA margin is going to come down to a more normal levels, maybe 25%-27% levels. For next year, as I said, earlier, once we have the budget, we'll be able to share more clarity with 2023. Overall, we have an optimistic view.
At least we don't have a very negative view of 2023. We think, especially in the summer months, we might see a reasonably strong demand continuation. If the weather turns the other way around, we'll be prepared for it as well.
We have a question from Goldman Sachs. They look at our NDR presentation on our website, and they are wondering about our roadmap of growth going forward. Could you please elaborate how you are planning to achieve your 2027 targets?
This is a little bit more about our strategy for the next five years. That is also something the executive team is currently working on. Hopefully, early in Q1 of next year, we will be able to share much, much more clarity on our strategy going forward with TK brand, with our low-cost brand, our cargo brand, and our new investments in the digitalization. Overall, the big thinking is we'll keep increasing the fleet, we keep growing the airline with a new generation aircraft, and we'll keep the fleet young. To the places where we cannot reach with our network, as Fatih Bey mentioned in the presentation as the example of our agreement with IndiGo and similar airlines, we will have codeshares or other collaborative efforts in the east, in the west, to increase our exposure.
We definitely will increase our CapEx investment in digitalization and simplification of our operational processes. Ancillary revenue and our loyalty program requires more investment, which we are currently running certain programs. Our third-party sales of our subsidiaries, which have also, just like Turkish Airlines, shown their endurance throughout the pandemic. They all showed very strong performance, and we will be able to showing their strong performance continuation through increasing their third-party sales, especially our MRO business, our and catering services.
Murat Bey, Görkem from Yapı Kredi and Jim from Goldman Sachs are curious about our ex-fuel targets for Q4.
Fuel is a very rather difficult commodity to predict these days. That put aside, on the ex-fuel side, we have shown that the ex-fuel cost decreased by about 5% in Q3. By the end of this year, we expect that to be on low single-digit decrease from 2019 levels. The inflationary pressure is of course affecting our operation, handling, catering, fuel, and personal expenses all around the world, but we have not seen that being too tremendously negative on our bottom line. As we look at it compared to our budget levels, we have not seen significant increase on our cost.
Murat , how much additional personnel costs should we assume for potential bonus payments?
Some of these bonus payments is already made. The one that is related to subcontractors and some of our subsidiaries on catering, on ground, handling services. We have not paid any bonus to the TK personnel yet, but there is some work going on it. Once we have it announced to the staff, we'll be able to share more details regarding to the amount of it. This year, looking at the financial numbers, the staff really from its ground service provider to the captains, headquarter staff, blue collars, and white collar staff, they all put a great effort for the success. Our board is going to decide on how much to award the staff. We have not finished that study yet, and we'll be sharing.
To our subsidiaries and the subcontractors, to hold on our staff and to keep them happy in this high inflationary environment in Turkey, we overall so far paid slightly over $100 million, as I said again, to our subsidiaries and the subcontractors that we hire. To the TK personnel, we have not yet finished that study yet.
How do you see the fuel CASK for this year on which assumption?
Fuel CASK, our current expectation is year-round, Brent is going to be around $98-$100 level. If this assumption holds, it will lead to 40%-50% fuel cost increase for TK, including our hedge positions.
What is your fuel hedging ratio and break-even price for the remainder of the year and your assumptions?
Our policy is to hedge up to 60% of our fuel consumption. However, starting from the beginning of this year, we stopped hedging after seeing the very high acceleration on Brent price, the high acceleration on the volatility. Since then, we have not hedged. We have not included any new position. In the first nine months of this year, total hedge position is around 38%. By the end of this year, if the price continues, the Brent price continues to be around these levels, and the volatility at these levels, we are not planning to add any new contract, so the hedge ratio can come down to 25%-30% levels by the end of this year. Brent assumption is already I think I said around $95-$100 year around average.
Adam from TEB is asking about our fuel hedging and our plans for the next year.
I think I already answered the similar question. What I can say for the next year is, what we are looking at to add new contracts is the current Brent level. We expect that to fall below $90, and the volatility to come further down to be able to make the hedging more attractive. This does not mean that we are having strong throwbacks from the current high Brent environment. Through the surcharges, fuel surcharges, we were at least through Q3 able to reflect some of the high Brent prices to the ticket prices. Having that widespread network enabled us to reflect some of this cost pressure on the ticket prices.
Now we are heading to currency and inflation questions. How appreciation of U.S. dollar affected your financials, especially against euro and Japanese yen?
Yes, dollar just in Q3 increased by about like a 5%-6% on top of. In our income statement and balance sheet, we were long in euros on the operational front b ut including our financial expenses, which are mainly the commercial loans and aircraft financing, we are having a balanced balance sheet in euros and dollars. The depreciation did not have much negative effect. Overall, I think in Q3, we might have a negative impact of about $9 million-$10 million. Including the net income effect, which includes the financing part, we are benefiting from the current currency environment by more than $150 million. Japanese yen depreciation is also helping us because we have about 30% of our financing, aircraft financing is denominated in Japanese yen.
Murat, you mentioned a little bit about our hedging regarding currency.
Currency hedging. We stopped currency hedging actually at the beginning of the year, as I was saying in the earlier question. We used to have long euro positions and which we used to hedge against Turkish lira and the other short position. Since the beginning of the pandemic, we don't have any more long euro positions because most of the commercial loans, actually almost all of the commercial loans we had through the pandemic in 2020 and 2021 were denominated in euros, and we kept adding new aircraft financing to benefit from the low financing environment for euros. We no longer need to have currency hedges.
Murat , I'm going to combine two questions regarding interest rates and inflation. First one, do you see high interest rates globally as a challenge for your business? The second one, regarding the inflationary pressures in Turkey, Sam from SMBC mentioned curious about how it affects demand.
Higher inflation environment. Well, if yesterday we had the inflation numbers above 85% level, that definitely looks like a risky point. However, when I was answering to an earlier question, in Q3, we had more than 70% of our tickets, domestic tickets were sold on the cap, and the load factor was about 90% in the domestic market. The inflationary pressure is definitely affecting the population. Turkey is a quite a big country with more than 80 million population. The overall total impact on our balance sheet, despite of the high inflation environment throughout the summer, was limited.
Regarding to the interest rate, well, luckily, with our current strong financial performance, we have about $4 billion dollar cash, and we are in no need in the near future to add additional financing. The only thing remains is the deposit rates, which we are benefiting from. High interest rates will have not a significant impact on our financing needs.
Murat, we are heading to cash and liquidity questions. What factors led to the increase in cash flow in Q3? Can you provide your full year expectations regarding cash levels?
As I was, I think, answering in the first question, the strong passenger demand, the cargo demand led us to have very strong operational performance. In Q3, we had around $200 million-$250 million cash generation in each month of Q3. This led us together with the strong Q2 results, helped us to deleverage some of our financing. Based on the performance, ongoing performance for the remaining part of the year, we are expecting our year-end cash level to be about $4 billion.
What is the CapEx and PDP plan for 2022 and next year?
Of the deliveries that will enter the fleet next year, roughly 15 of them will be financed. We'll be getting some PDP back. Total CapEx for next year is going to be about $5 billion. About $3.5 billion will be for the new aircraft. The remaining $2 billion will be for maintenance, engines, and some remaining construction for our buildings in Istanbul Airport.
What is your expected net debt levels by the year?
Expected net debt this year, we decreased our commercial loan book by about $1.5 billion. With the paying back of some of the aircraft financing, net debt to EBITDA could be around 2-2.5 times, which is a significant drop from where we were at the top of the pandemic.
Murat , on some of the previous questions you mentioned about our aircraft entries for this year. Maybe you can give us a little detail about our upcoming fleet entries.
Yes. Next year, overall, 39 deliveries will enter the fleet, and roughly 15 of them are directly from Airbus and Boeing, the new deliveries, and the remaining will come from the operating lessors. 39 is for 2023. Between 2024-2028, currently, we have about 58 deliveries b ut our investment management team is looking for new aircraft, especially for cargo for AnadoluJet to replace their old narrow-body aircraft. This number could go up from 2024 and on. We might be getting more aircraft.
Murat, we have multiple questions regarding our order book. Jim from Goldman Sachs, Mehmet Bodur from QNB a nd Kurt Hofmann from Air Transport World is curious about our are we having any difficulty regarding next year's deliveries, aircraft deliveries?
Not next year deliveries, but we have been having difficulties in getting our 787 orders, especially that we ordered last year. That problem is hopefully mostly resolved. Of the 787s, one of them is going to hopefully come by the end of this year, and the remaining seven are going to enter the fleet by next year. The rest of the fleet are Airbus. We have neos and A350s. They are going to come as scheduled. What is problematic is to get the new orders soon from the OEMs.
Regarding AnadoluJet, are there any developments you may share with us regarding its capacity?
Yes, as I was saying earlier, we are in the market looking for new generation aircraft for AnadoluJet. We are planning to increase their capacity by around 20% this year. Next year, we are expecting to increase their capacity by additional 15%-20%. After the second runway starts operation in Sabiha Gökçen Airport, the second airport in Istanbul, it definitely will be able to absorb much bigger capacity growth for AnadoluJet.
Murat , on our transcript, we talk about our cargo expectations in detail. Our analysts are quite curious about details, how it will evolve. To that end, could you give us a few words regarding our expectations about cargo business?
This year, cargo really fulfilled what we were expecting from it. Despite, over the last few months, we are seeing some erosion in the yield environment. They are being able to compensate this drop with increasing the total ton carried, with the help of our belly capacity. L ast year, their total cargo capacity was lower than 6%. In Q4 of this year, we expect the unit revenues and capacity to be slightly below 2021 period. Cargo is going to keep growing. That's why we are looking for new freighters and extend our wet lease operations with our current leasing companies. N ext year we'll keep cargo on our top agenda to grow its business.
One question here says, "What percentage comes from cargo?" Overall, well, that's difficult to put into perspective because of the belly, which is a significant contributor to both on the passenger side and the cargo operations. It's definitely we are running a very profitable cargo operation. Maybe for the first nine months to put into some perspective, about 30%-35% of the profit is coming from cargo.
Murat , we have couple of additional questions. Murat Güler from Investment Promotion Agency of Qatar is asking about our dividend policy. Are you planning to change our dividend policy?
No, we don't want to change. We are not planning to change the dividend policy. What prevents us to pay dividend is not our intention to or in our where do we stand regarding the policy. What prevents us to pay dividends is the accumulated losses we had in our income statement that is prepared according to Turkish tax code. There are numerous reasons for this, and we have elaborated on them many times. As soon as we are in a position to distribute dividends, we will be more than happy to do so, and looking forward to the years ahead of us where we can share some of this profit with our shareholders.
Ayşe Gürdağ from ICBC Turkey is asking , are you planning any acquisition of an airline company in the future?
We are not at the moment working on such a project. Not acquiring an airline, but increasing our collaborative efforts, which can be through codeshares, through JVs, local JVs, regional JVs, to increase our exposure in the Far East market and in the Americas. In these two regions in particular, we are looking for more collaborative opportunities with other airlines.
I think this answers Kurt Hofmann's second part of the question. The maintenance base in Asia is our answer to Emirates. I think this answers that question as well. I believe thes e are all of the questions. We would like to thank you for your participation, and hope to see you in our next call next year. Thank you.
Thank you, gentlemen. Thank you very much. Ladies and gentlemen, thank you for your participation. This concludes today's webcast call.