Ladies and gentlemen, welcome to this Turkish Airlines Fourth Quarter 2024 earnings call. We will have a question and answer session following the presentation, written questions only. If you would like to submit your questions, you can do them anytime. You can send them anytime, even during the presentation, by clicking that Q&A button, which you will see at the bottom of your screen.
There it is, down the bottom there. All right. Our speakers today are Associate Professor Murat Şeker, Member of the Board and the Executive Committee, as well as the Chief Financial Officer, and Mehmet Fatih Korkmaz, Head of Investor Relations, both from Turkish Airlines. Gentlemen, over to you.
Thank you very much. Good afternoon, everyone, and thank you for joining us today. Today's announced results underscore our industry-leading position with revenues exceeding $22.5 billion and achieving a full-year net profit of $3.4 billion. Our return on invested capital continues to materially outperform the industry, indicating disciplined capital allocation, prudent financial management, and agile execution. This historical performance underlines Turkish Airlines' resilience across cycles.
By leveraging structural advantages, Turkish Airlines' growth trajectory remains robust, with the 10-year strategy progressing effectively. Before going into details of the results, I would like to take a moment to discuss key drivers that shaped last year's operating environment. 2024 presented significant challenges for airlines worldwide.
While heightened geopolitical tensions and macroeconomic uncertainty put pressure on demand, bottlenecks in aircraft production, engine issues, and air traffic congestion constrained capacity growth. These factors tested the industry's capabilities, requiring flexibility and operational efficiency.
Amid these headwinds, Turkish Airlines once again demonstrated its ability to navigate uncertainties while maintaining a strong financial performance. 2024 was a year of milestones and achievements. We expanded our footprint into a new continent with the addition of Melbourne and Sydney. Other new destinations, such as Denver, Torino, and Santiago, increased the number of served countries to 131 and total international destinations to 299.
Turkish Airlines also reinforced its leadership position as a global connector by officially receiving the Guinness World Records title for most countries flown. Moreover, in 2024, our company was recognized as the Five-Star Global Airline by APEX for the fourth time, Best Airline in Europe by Skytrax for the ninth time, and Most Sustainable Flag Carrier Airline for the third time by World Finance. These awards reaffirm our commitment to excellence in passenger experience, product quality, and sustainability.
Beyond core operations, key developments took place across subsidiaries and commercial initiatives. The main highlight of 2024 was the launch of AJet's transformation journey, aiming to strengthen its position in the fast-growing low-cost segment. With a new fleet and lean corporate structure, AJet is set to optimize unit costs and enhance its competitiveness.
Widect, our dedicated e-commerce subsidiary, and Turkish Holidays, which bundles all travel experiences together, expanded operations as part of broader efforts to diversify revenue streams. Meanwhile, Miles&Smiles surpassed 20 million members, and TK Connect, the airline's new distribution capability platform, went live, enhancing sales channel capabilities.
Now, I would like to turn your attention to our results for the year. Turkish Airlines continued its strong momentum in 2024, building on its position as the busiest network carrier in European airspace. Passenger capacity rose by 8.2%, surpassing pre-pandemic levels by 35%.
Turkish Cargo increased its annual cargo volume by over 20%, becoming the world's third-largest air cargo carrier, according to data published by IATA. Correspondingly, cargo revenue surged by 35% compared to 2023, while passenger revenue grew by 4% under intensifying competition. Combined with a contribution of $500 million from Turkish Technic, total revenues climbed by 8%, reaching almost $22.7 billion.
Cost pressures from personnel wages and GTF engine groundings resulted in a 16% decline in profit from main operations, which stood at $2.4 billion. However, a sizable contribution from the investment portfolio helped offset these cost pressures on the bottom line. As a result, net income reached $3.4 billion, representing a 17% increase excluding the one-off tax gain of $3.1 billion in 2023.
Finally, net debt improved by more than 20% due to strong operational cash flow and disciplined CapEx management, ensuring financial flexibility as we execute our long-term strategy. Reflecting balance sheet strength and confidence in the business trajectory, our board is pleased to propose reinstating dividends. A total payout of approximately $260 million, with a ratio of 7.6%, will be presented at the upcoming General Assembly.
This marks a significant step in demonstrating Turkish Airlines' commitment to its investors. Moving forward, we are targeting sustainable, consistent, and competitive dividend payout payments, supported by share buybacks as a part of our total shareholder return strategy. Looking ahead to 2025, the industry's supply-demand imbalance is expected to persist to a lesser extent than last year. Ongoing challenges, including constrained aircraft production and GTF engine issues, will continue to limit growth. Additionally, aircraft delivery delays create uncertainty in capacity allocation.
Given these factors, we currently anticipate 6%-8% passenger capacity growth with flat yields in 2025. We will provide updates about fleet entries and adjust our projections when necessary. In closing, 2024 was a year marked by resilience, growth, and strategic progress. Despite a challenging operating environment, momentum was preserved, bringing Turkish Airlines one step closer to achieving its decade-long targets.
Our staff, as always, played an integral role in this success, and deep appreciation goes to the entire Turkish Airlines family for their remarkable performance. I will now pass the call over to Fatih Bey to elaborate on our results and provide additional insights.
Thank you, Murat Bey, and good afternoon, everyone. We now move into the details of our operational and financial performance. As Murat Bey briefly outlined in the first part of the call, external factors coupled with heightened competition in key markets required us to be diligent in capacity management.
Benefiting from our extensive network, we selectively increased passenger capacity in the fourth quarter by 8% year-over-year. This expansion was supported by a notable increase in travel appetite recovery in demand compared to previous quarters, with the holiday seasons contributing positively.
For the full year, international capacity exceeded the pre-pandemic levels by 39%, significantly outpacing the global industry recovery, which remained 1% below 2019 levels. Correspondingly, international market share recorded as 3.4%, positioning us as the third-largest network carrier in the world. In 2024, transfer traffic remained strong, with a 6% increase in passenger numbers compared to the previous year.
Despite concerns about the real appreciation of the Turkish lira, the diversified tourism portfolio of Türkiye preserves its attractiveness. Accordingly, the number of tourists visiting the country rose by 9%, reaching an all-time high of 62.2 million. Istanbul ranked as the second most visited city globally, with Antalya not far behind, ranking sixth. Additionally, January's tourism figures and our forward bookings indicate that this positive trend is continuing.
From a regional perspective, Far East and the Americas were the top-performing regions in the last three months of 2024. Over the year, capacity and passenger numbers grew steadily in the Far East, with a 26% increase in capacity and a 24% rise in revenue compared to last year. Although intensified competition led to a 7% decline in passenger yields, strong cargo demand offset the negative pressures. As a result, total RASK recorded 2% above last year.
In North America, aircraft delivery delays and geopolitical disruptions limited our ability to fully optimize capacity, keeping load factors nearly flat compared to last year. Despite these challenges, ASK grew by 12% in both the fourth quarter and the full year, contributing to an 8% increase in revenue over the same periods. While the suspension of key transit points in the Middle East pressured our further performance, seasonal softness in November added pressure.
However, the resumption of belly flights in December helped to improve results. In South America, the opening of the Santiago route in December marked a key milestone in our regional growth strategy. In this context, the upcoming launch of the Lima, Peru route will further strengthen our presence in the region. European markets remained stable throughout the year. The first half of the year benefited from robust inflow, particularly from the Americas and Far East.
Air traffic congestion was a notable challenge, especially during the summer months, affecting on-time performance across the region. However, our efficient operation at Istanbul Airport helped us to manage this difficulty, as our on-time performance recorded 9 percentage points higher than the European average. Additionally, in the fourth quarter, effects of the weakening EUR/USD parity were broadly felt.
After initiating the most severe capacity cuts since the pandemic in the Middle East, peace talks in the region contributed to meaningful growth. Saudi Arabia remains a strong performer, benefiting from government-driven tourism initiatives, while outbound traffic from the United Arab Emirates helped mitigate softer inbound demand. Moving forward, the broader political landscape will remain a critical factor shaping regional outlook. In Africa, closed transit and local distribution remain broadly the same, with demand fluctuations driven by political developments and economic conditions.
The impact of the Israel-Palestine conflict and the effects of it persisted throughout the year, though traffic shows signs of recovery towards the end. By the fourth quarter of 2024, capacity in the region increased by around 6%, while revenue grew by 9% on the back of 3 percentage points higher load factor. High-performing groups, including Mauritius, Accra, and Dar es Salaam, are set to support the growth trajectory.
Ancillary revenues continued its upward trend, with the highest contribution coming from the Americas in the fourth quarter. Seat selection revenue exceeded expectations, driven by increasing passenger adoption, while business-class upgrade revenue materially surpassed last year's levels. In the following years, ancillary revenue generation will gain momentum, supported by initiatives such as TK Connect and the implementation of modern airline retailing capabilities. These advancements will enable a more personalized, dynamic, and seamless shopping experience for our passengers.
In 2024, passenger revenues rose by 4% due to 3% lower yields on the back of 8% higher capacity. Cargo performance was strong, as revenue surged by 35%, driven by both volume and price increases. Elevated e-commerce demand, rising global trade, and disruptions in the Suez Canal will remain as the main drivers throughout the year. Recent indicators point to a softening in cargo demand, driven partly by an uncertain macroeconomic outlook, mainly stemming from tariffs and persistent inflation.
While e-commerce activity remains strong, shifting global trade dynamics threatens the overall growth. At the same time, prospects of Red Sea openings are having an impact on pricing. On the other hand, we acknowledge the potential opportunities from the increased friction on global trade flows and companies' inclination towards adopting a more flexible approach to mitigate supply chain vulnerabilities. Consequently, we anticipate a broadly neutral cargo performance in 2025.
In 2024, Turkish Cargo also ranked as the third-largest cargo carrier worldwide. This marks a significant achievement, with market share having more than tripled over the last decade. In line with our 2033 volume and revenue targets, we are about to start the second phase of our cargo investments at Istanbul Airport. This expansion will increase our cargo handling capacity from 2 million to 4 million tons.
Meanwhile, Widect, our cargo express focus subsidiary, successfully completed its first year with profit. As we expect to double its revenues in 2025, it is well-positioned to capitalize on the growth opportunities in the sector. Last year, AJet's capacity remained flat in order to address operational disruptions caused by aircraft delivery delays and unplanned maintenance events.
As a precaution, we increased the number of backup aircraft and extended block hours, ensuring improved on-time performance and overall operational stability. While targeted pricing strategies and promotional campaigns help support booking trends, international routes face a competitive environment, leading to relatively softer load factors. The company also adapted to evolving passenger preferences and market conditions, ensuring a balanced approach to both network growth and operational efficiency.
Looking ahead, AJet remains committed to enhancing its operational efficiency and improving their revenue streams. Structural transformation efforts are progressing, with dedicated teams working on increasing ancillary revenue, creating more product bundles, and optimizing cost structures to support long-term profitabilities.
For the full year, substantial contribution from the cargo segment and resilient passenger operations resulted in 8% higher annual revenue. Profit from main operations, on the other hand, declined by around 16% due to increasing cost pressures. At the same time, EBITDA recorded as $5.7 billion, with a 25% margin.
On the positive side, a sizable contribution from our investment portfolio helped mitigate negative impacts on profitability. As a result, excluding last year's positive inflation accounting adjustment, net income rose by 17% to $3.4 billion, while fourth-quarter profit increased by almost fivefold year over year.
During 2024, total cost per ASK rose by 5 percentage points, primarily due to personnel expenses. Inflation adjustments on wages, along with the bonus payment of $250 million, led to more than a 40% increase in personnel costs. Other labor-intensive expenses, such as handling and passenger services, also saw notable increases. However, lower fuel prices and jet crack spread partially offset the rising non-fuel costs. Meanwhile, the impact of GTF engine issues on ex-fuel unit costs was effectively balanced by the compensation agreement with Pratt & Whitney, though below the line.
This resulted in a 1.5 percentage point increase in ex-fuel costs for the year. As you can see from the slide, our on-hand liquidity increased by around $800 million to $7.2 billion. Strong cash inflow from our investment portfolio and recent depreciation of the euro against dollar reduced net debt by $1.6 billion to $5.7 billion, marking a 40% drop in its peak level at the end of 2020. As a result, leverage decreased its lowest level of 1.1 times by year-end.
Currently, global travel appetite remains healthy, yet global uncertainties present a downside risk to demand and pricing dynamics for passenger operations. Consequently, we budgeted the revenue growth in line with passenger capacity growth of 6%-8%. On the cost side, we anticipate normalizing ex-fuel costs, which is expected to be up by mid-single digit percentage points compared to last year.
Correspondingly, we expect an EBITDA margin between 22%-24%. In our long-term strategy, sustainability is at the core. By continuing to modernize fleet with next-generation aircraft, expanding the use of sustainable aviation fuels, and increasing energy efficiency, we are advancing towards our goal of becoming a carbon-neutral airline by 2050.
In 2024, we took significant steps in this direction by publishing our climate transition plan, increasing transparency around climate-related risks and opportunities. Additionally, we completed our first sustainability-linked aircraft financing, aligning our financial strategy with environmental commitments.
This year, we enhanced operational efficiency through more than 100 operational optimization projects, leading to more than 70,000 tons of fuel savings and a reduction of 220 tons of carbon emissions. In addition, we expanded the use of SAF on new domestic routes and international ones, tripling our total SAF consumption by the end of 2024 compared to the previous year.
With our holistic sustainability approach, we strengthened collaboration with the subsidiaries and suppliers, setting concrete sustainability targets, ensuring 75% of our key suppliers are aligned with these goals. Our efforts were once again recognized globally as Turkish Airlines was named as the most sustainable flag carrier airline for the third consecutive year by World Finance.
Additionally, we improved our performance across major sustainability indices and secured a silver rating from EcoVadis. With this note, we conclude our presentation and can continue with the Q&A session.
Thank you, speakers. Yes, indeed. It's time now for your questions, which you can submit, written questions only, like we said, via the Q&A button, which you will see at the bottom of your screen. And with that, gentlemen, I leave the question and answer session over to you.
Welcome back, Murat Bey. We got a number of questions from our analysts and investors. We also touched on our fourth-quarter performance during the first part of our call, but would you like to highlight the main points?
Sure, thank you very much, so in particular, three of the key points concentrate on the cargo, especially the demand originating from the Asia region and the strong level of e-commerce and the disruption in the sea freight helped us to keep our cargo revenues strong.
Year-on-year growth on the fourth quarter was around 21%, and the increase in the volume was around 5%, and together with this, the easing out on the passenger revenue and yields that we saw in the third quarter kind of improved, and year-on-year revenue increase on the fourth quarter on the passenger side was around 8%, and the yield erosion stopped, and we had almost a flat yield change on the passenger side.
The domestic demand continued to be strong on the fourth quarter. Yields were about 15% higher, and the low fuel price, the decrease in 11% also supported our bottom line, and lastly, we continued to benefit from the interest rate environment, and with the profitable management of our investment portfolio, we were able to gain some profit financial income on that perspective. These are, of course, the positive developments.
On the negative side, the personnel costs that we have iteratively expressed in every quarter of last year, the personnel cost increased 41%, and because of the high inflation adjustment and the relatively overvalued Turkish lira, but the good development is going forward. The increase in salaries for the remaining for 2025 are already budgeted in, and there won't be a surprise on that front because the union agreement comprised 2024 and 2025 years.
Inflation expectation has come down, and we expect a more balanced development of Turkish lira against dollar with the inflation rate. Lastly, the grounding of the Airbus Neo aircraft are going to be decreasing from about 40 to 30 aircraft. So that is also going to be giving an upside, has given, sorry, an upside momentum for 2024.
Continuing with the GTF issue, can you give us more details about the current situation?
I mean, we have been in very close coordination with Pratt & Whitney regarding the engines of the grounded aircraft. And as Fatih mentioned in an earlier call, we also expressed we have already signed a compensation deal.
Part of it was received in 2024, and the remaining part will be fully received in 2025. The number of grounded aircraft decreased by 10 aircraft, and we hope that will continue in the remaining part of 2026. But it's a little early to say an exact number on how many aircraft will be grounded for the year of 2026.
Murat Bey, we got a number of questions regarding our current booking trends and what your expectations in 2025 from Bank of America, to Türk Ekonomi Bankası, BNP, Yapı Kredi, and Conroy from Bloomberg. They said that your guidance implies broadly flat unit revenues, but do you see much variation across different regions?
Of course, the regions, they have shown a very different path of recovery after the pandemic. I mean, we saw America and then Europe recovered faster. We saw demand in those regions much earlier than the other regions. But going forward, what we expect from 2025 is we'll keep continuing to put capacity.
As we said, overall, we're expecting 6%-8% capacity ASK growth, but this is not going to be equally distributed across the regions. Americas and Far East are going to get the lion's share in this capacity growth and how this will affect the yield evolution. Of course, if you put too much capacity, then it's fair to see some erosion in the yields, but as long as your load factor is intact and then overall your revenue is increasing, and that's more or less what we are anticipating across the regions.
In Europe, the capacity growth will be around 2%-3%, but the yields will be flattish and the load factors will be flattish. On the Far East, we are anticipating to put around 7% in the first half of the year, and with much less erosion in the yield environment.
In Americas, that also continued to be one of the strong regions for us. We are anticipating to put a 13% ASK growth. As we mentioned, we opened a few new destinations that we're looking into further opening up new destinations for the remaining part of 2025. And the domestic market has kept its strength, and we expect that to sustain this into 2025, and expect to have about six, seven, no, about overall 8% more growth in terms of capacity going forward into 2025.
This is also one of the most asked questions. If the Ukraine-Russia conflict is resolved, what impact do you expect to see? How prepared are you for such a scenario, and how would it affect the overall operating environment?
The Ukraine, we h ope it's resolved very soon. However, when we look at the overall picture, according to the Turkish statistics agencies, number of incoming tourists from the region, we have not seen really a major increase after the war, if at all. So the number of tourists coming from before the war, Russia plus Ukraine plus Belarus, used to make, roughly speaking, 19% of all incoming tourists to Türkiye.
And because the Ukraine was shut down and Belarus operations was shut down, we missed some of these incoming tourists, even though they came through other channels to Türkiye, but we were losing some of the tourists because of the distress in the region. And before the war, we used to fly, operate to about 10 destinations in Ukraine and 14 cities in Russia. And currently, Ukraine is completely shut down, and in Russia, we are only operating in two to three cities.
So if the war stops, we believe it's going to benefit Turkish Airlines operations in the region, and we'll be getting more tourists, and we will be resuming all of our operations. And there is also a lot of the traffic that stopped from the Americas to the region because of the war. So that, of course, together with the competition, but we'll be able to get our fair share of that market. So overall, we won't be hurt by the end of this war. If anything, it will benefit our operations to the region.
Murat Bey, since you mentioned tourism, can you share your expectations regarding the tourism season for Türkiye?
As you know, for the last three years, after the pandemic, we have shown very strong momentum of growth in the number of tourists. We finished 2024 with an 8% increase in incoming tourists to reach 62 million. And going forward into 2025, we expect to have about like a 4 percentage points to 65 million tourists. And in January, we already saw about a 6% increase in incoming tourists, incoming tourists to Türkiye. So we keep our positive outlook for the incoming tourists to Türkiye.
Continuing with cargo, can you share your comments on the cargo performance and its outlook? And how do the recent tariff changes and political challenges impact your company?
As we mentioned in the call, the cargo operation is performing quite well. The revenues rose quite swiftly on the back of the significantly high volumes and yields. We had a record amount of cargo carried, got close to 2 million tons. We are already, we're about to start constructing our new cargo terminal, an additional facility of the same magnitude, with the belief that cargo operation will keep its strong profitability going forward.
In all of the regions, our performance was significantly better than the peers in cargo, and this was a direct result of our initiatives that we highlighted in this strategy. Our investments in infrastructure, along with the new products targeting the express cargo and specialized cargo, we have been able to successfully capitalize on the demand.
The integration of Widect, our e-commerce subsidiary, it helped us to better utilize our cargo capacity and benefit from the global network. Widect, which was established in 2024, already finished its first year with a profit, and this year in 2025, we expect them to double their revenues going forward.
And for 2025, we anticipate market normalization due to these uncertainties around the tariffs, the macroeconomic outlook, and the reopening of the Suez Canal, but it's a little early to really be able to say the impacts of the tariff changes. You know, we have to see how the winter season, which is the peak season for cargo, evolves, and for that, we need to see the February and end of March.
Murat Bey, as you mentioned, unit expense is one of the headwinds throughout last year. On that front, we got questions from BOFA, BNP, yep, and multiple analysts. So could you discuss your ex-fuel cost expectations for 2025? How much pressure are we expecting to see, and how do you plan to manage other cost items in this context?
Ex-fuel cost was really one of the key items that which we had difficulty to project through the year. The relatively undervalued euro against dollar, overvaluation of Turkish lira, higher than anticipated inflation rate, operation disruptions.
They all led us to kind of undershoot our ex-fuel cost guidance. We believe in 2025, with decreasing global inflation, more predictability about the demand and the currency stability, we are expecting ex-fuel cost to be around mid-single digit increase year over year. One of the reasons why we have this improvement in our ex-fuel cost target is moderating inflation in Türkiye.
As you know, more than 30% of our unit of our costs are in Turkish lira and out of Türkiye. Moderating inflation and the real appreciation of Turkish lira, moderating inflation in Türkiye is going to support our cost targets.
In the meantime, we paused hiring except for capacity growth, which will enhance our operational efficiency. As I said earlier, there won't be a wage negotiation with the unions this year. Expansion of the TK Connect implementation, which is our platform for ticket sales to do that we request our travel agency to implement, it had so far brought a generous amount of savings on our sales and distribution expenses.
Further improvements on on-time performance enhanced efficiency, and it reduced costs in 2024, and we expect this to sustain. Last year, our on-time performance increased by 11 percentage points to 75%, which is 10% better than European average.
What are your expectations for fuel costs and on one assumption? What assumptions? Can you also share your hedging ratios?
Our hedge ratio is to hedge up to 60% of our annual consumption. Currently, we are around 35%-40%, and by the end of the year, we expect to be around 50% hedged. Our break-even Brent price is $75. Our guidance for the Brent for the year end is between $77 and $75. So we expect this to provide further improvements in our fuel cost by about like 5-8 percentage points.
Murat Bey, is it possible to talk about your guidance for this year? Especially you mentioned about capacity, but what all of these moving parts translate into?
The bottom line is we'll keep growing. We have been on a very strong path of growth in terms of capacity and PAX number in the last three years. This year, given the growth in the fleet, which we expect to be around 20 additions net growth on the fleet size, this will give us somewhere between 6%-8% ASK growth. We are expecting a flattish load factor.
Then relatedly, number of passengers are going to be also increasing somewhere between 6%-8% levels. And the RASK and the revenue is also going to be increasing around 8%. And we are, when you combine all this, guiding an EBITDA margin of somewhere between 22%-24%. And in order to be able to achieve this, this shows that we probably will have a flattish yield evolution into 2025.
What is the anticipated fleet size to reach these guidance numbers?
We finished 2024 with around 492 aircraft. This year, there has been some delays, especially for our AJet fleet. But overall, as I was just saying, we are expecting to add about 20 aircraft to the fleet, roughly 13 or 14 widebodies and about 20 narrowbodies. And so net at the end of 2025, we are expecting to reach a fleet size of somewhere between 515 and 520.
What are the estimated capital expenditures and pre-delivery payment figures for 2025? And accordingly, what is your yearly expected net debt level?
So the CAPEX, most of which will be the fleet and then respectively our infrastructure needs in Istanbul Airport, we are expecting to have a gross CAPEX of $4.5 billion. But as we keep saying over the over our calls, a big part of this CAPEX is formed of the aircraft, and we finance almost all of our aircraft financing needs.
So overall, 70%, roughly 70% of this gross CAPEX is going to be financed in 2025. And further, there will be somewhere around $100 million of PDP inflows with the deliveries that we will be getting. Regarding the net debt, we expect that to be around $6.5-$7 billion level and net debt to EBITDA ratio of somewhere between 1.1-1.3 times.
Murat Bey, in the first part of the call, I briefly touched on the AJet. Can you also comment on its performance?
So AJet started its operation at the end of March of last year, but it was quite challenging because of the late deliveries of the aircraft. We had to wet lease about 26 aircraft for them to sustain their operation. It did not run very smoothly. There was a lot of technical and maintenance requirements of these wet lease aircraft.
This year, we stopped all that wet lease operation, and most of the fleet will be through operating leases. And this will give AJet a capacity growth of around 15%. But considering the low base effect, this is kind of a growth over two consecutive years. With the 15% growth, they will have overall 120 aircraft in the fleet, but excluding the grounded aircraft, they will be operating somewhere between 90 and 95 aircraft in 2025.
And they're operating in 31 countries. Roughly 60% of their operation will be formed of their international operations. From 20 million passengers, we expect them to also increase this by around 15% to 23 to 24 million passengers.
Now, the question of the day. After a long period, a dividend distribution was announced this morning. Could you share your thoughts on this decision and your future strategy and total shareholder return?
Sure. We definitely are quite pleased to show our commitment to our shareholders' returns by issuing our first dividend since 2013. Although our board wanted to distribute a dividend for quite some time, the technical losses in our statutory accounts prevented us to do so, and we have been informing our investors about this issue for a very long time.
Fortunately, the inflation accounting implementation in 2023 helped us to resolve this hurdle. And today's announcement reflects our strong financial performance and the confidence in our business strategy. It also underlines our balanced approach between rewarding our shareholders and investing in our business future to sustain long-term value creation.
We believe the announced payout is a sustainable ratio, the 8%, 7.6% to be more precise, to be consistent with the following years. It also aligns well with our long-term financial discipline and growth strategy. As you saw in the first part of our presentation, I shared some of the criteria which we expect to base our dividend policy: an EBITDA margin between 22%-25%, excuse me, net debt to EBITDA ratio below 2.5 times, liquidity level exceeding 10% of the following 12 months' revenues are going to be the key factors we will consider for paying further dividends to our investors.
Thank you, Murat Bey. How is the depreciation of euro and the strength of USD affecting your financials?
Well, on the balance sheet, on the balance sheet side, we are short in euros as this currency constitutes 45% of our aircraft debt. So as a result, depreciation of euro had a positive impact on the balance sheet. Considering on the income statement, we have a net long position on euros, and euro depreciation had a negative impact on the bottom line. Roughly speaking, a 10% depreciation of Turkish lira has about $250 million dollar loss in forms a loss in net cash flow, but has a positive impact on the balance sheet.
Murat Bey, based on today's result and the current operating environment, will there be any updates on our 2023 strategy? Do your expectations align with the current results?
Well, the first two years of our strategy, even though the fleet development was not overlapping fully, the bottom line, the profit margin, and then the revenue evolution was significantly aligned with the strategic targets. So we are not too concerned about the current delays in aircraft manufacturers for two reasons. Number one, the bottom line profitability ratios are aligned with our strategic targets.
Number two, we have been able to successfully get that missing fleet development through the leasing market. From 2019 to 2024, we have added about 125-130 aircraft to the fleet, and half of this is coming from the leasing market and half is coming directly from the OEMs. So we have been also successful in maintaining our fleet evolution to be able to keep a sustainably profitable growth.
Thank you, Murat Bey. Dominic and Kurt ask us about what is the current plan regarding the Boeing order and how many aircraft are you planning to order at the same time? Will Turkish Airlines evaluate additional Airbus orders?
So unfortunately, I don't have anything much to add to this question compared to what I have said so far in the previous calls. We are still, we are continuing our communication not just with Boeing, but also with the engine producers, with the GE, with the CFM. And we have not, we have made definitely progress on the contractual terms, especially the engine part, but we have not come to an agreement on the Boeing order. We are discussing an order size of 200-250 aircraft, a mix of wide and narrow bodies. So that is still progressing.
Murat Bey, we have two quick questions. I'm going to answer those if you allow me. Ilker Gümüştaş asks about what is your personal cost expectation in USD terms for 2025? We expect high single-digit increase, as Murat Bey mentioned. The environment is quite visible for now.
And how do you see your free cash flow margin trajectory going forward? We use around eight. We expect around 8%-12% as a run rate, so you can use it from our current projections. It is aligned with our 2023 strategy. So I believe we have no further questions. So we conclude our fourth quarter earnings call. Thank you all for your participation and hope to be with you next quarter.
Thank you, speakers. Yes, indeed. Thank you, ladies and gentlemen. Thank you for your participation. And that concludes today's conference call. You may now disconnect. Have a wonderful evening.