Good afternoon, everyone, and thank you for joining us. 2025 passed with a rapidly changing and at times rather volatile operating environment for the global airline industry. While passenger demand remained mostly supportive, airlines across the world navigated geopolitical and macroeconomic uncertainties along with aircraft delivery delays and engine reliability issues. These dynamics carried over to the new year, with extremely heightened geopolitical tensions in the Middle East, adding a further layer of uncertainty to the operating landscape. In this environment, Turkish Airlines leveraged its diversified business model and flexible operating structure. These capabilities have been repeatedly tested in recent periods by various external shocks, and each time they enabled us to respond swiftly while preserving financial discipline. 2025 was no exception. During the year, we selectively deployed capacity and carefully managed costs under the inflationary environment with a clear focus on cash generation.
As a result, our performance demonstrated clear separation from the industry across key operational and financial metrics. We recorded capacity growth of 7.5%, two personal points higher than the industry, and more than 45% above 2019 levels, a performance rarely matched among comparable full-service carriers. More importantly, this growth translated into profitability with our EBITDA margin remaining above 23% ahead of the sector benchmarks. At the same time, the return on invested capital continued to materially outperform the industry, reflecting a track record of disciplined capital allocation, prudent financial management, and agile execution. Supported by our structural advantages, we remain on track with our 2033 strategic roadmap. 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.
Through our 2025, we further strengthen our fleet and network depth, reinforcing our unique global positioning. With 24 net aircraft growth, our total fleet exceeded 500 milestone and reached 516 aircraft. We also completed our planned Boeing wide-body order, supporting our long-haul growth targets and operational efficiencies. With the addition of four new destinations, we expanded our international network to 303 destinations across 131 countries, maintaining our leadership as the airline flying to more countries than any other. Our service quality and brand strength attracted global attention over the years. We were honored with the APEX World Class Award for the fifth consecutive year and named Best in Class for Sustainability for the second year in a row.
In addition, Skytrax recognized us as the best airline in Europe for the tenth time, demonstrating our ongoing focus on improving our customer experience. On the financing side, one of our most notable achievements was having European Overall Deal of the Year award by Airline Economics for our innovative Islamic finance lease transaction denominated in Swiss francs. We also advanced several strategic initiatives across our investment and a subsidiary portfolio. Our minority share acquisition in Air Europa aimed creating additional connectivity opportunities at Latin America, Europe, and Türkiye. We also further deepened our commercial cooperation in Asia through a joint business agreement with Thai Airways, establishing a revenue sharing structure on Istanbul-Bangkok route to unlock additional passenger traffic. Turkish Technic signed an agreement with Rolls-Royce to establish a regional wide-body engine maintenance hub at Istanbul Airport, which is expected to become operational in late 2027.
Furthermore, in line with our long-term vision, we broke ground on infrastructure investments spanning cargo, technical maintenance, catering, data centers, and training facilities with a total value exceeding $2.5 billion. These investments are designed to secure our future capacity growth and elevate operational capabilities. Our digital capabilities were expanded with the launch of TKPAY, which streamlines payment processes and reduce friction across the travel value chain. Turkish Airlines Holidays was rolled out globally, enabling passengers to plan their entire travel experience through a single integrated platform. All these initiatives support our strategy of strengthening core operations while selectively expanding into adjacent high-value segments. I would like to turn your attention to our financial results. In 2025, capacity grew by 7.5%, building on our position as owning the busiest operation in Europe amongst the network carriers.
We carried more than 92 million passengers with a load factor of 83.2%. As we focus more on operational reliability, our on-time performance improved by 4.6 percentage points, placing us among the top 10 carriers in Cirium's 2025 global on-time performance rankings. On cargo side, Turkish Cargo increased its annual volume by over 8%, maintaining its spot at the world's third-largest air cargo carrier, according to data published by the International Air Transport Association. Despite elevated market volatility throughout the year, our 2025 results materialized broadly in line with our expectations. Total revenues increased by more than 6% year-over-year, reaching $24 billion. Passenger revenues rose by 7%, supported by the healthy international and premium demand.
Meanwhile, cargo revenues were slightly down by 3% and stood at around $3.4 billion in a challenging year shaped by tariff tensions and decelerating global trade. On the other hand, Turkish Technic's revenues increased by 21% to $2.7 billion as aircraft production bottlenecks pushed airlines to operate older aircraft. Inflationary pressures on cost items, especially in personnel, were less pronounced in the fourth quarter. With strong revenue performance, our profit from main operations improved by 23% in the last quarter. As a result, full-year operating profit recorded as $2.2 billion. A sizable return from our investment portfolio further supported the bottom line. Consequently, net income reached $2.9 billion.
Strong operational cash inflow and lower aircraft pre-delivery payments resulted in $2.8 billion free cash flow, representing a 45% increase compared with previous year. We are comfortable with the current level of 10% free cash flow margin, as it ensures financial flexibility while executing our long-term strategy. Looking ahead, our forward bookings for 2026 are robust. Both passenger volume and unit revenue readings are above previous year. We entered the year with strong momentum carried over from the fourth quarter, and our January, February results have been encouraging. We expect this positive trend to continue, unless disrupted by the recent turmoil in the Middle East region. In closing, 2025 was marked by resilience, growth, and strategic progress. Despite a challenging operating environment, momentum to achieving our decade-long targets was preserved.
We thank our employees, passengers, and shareholders for their ongoing trust in Turkish Airlines. With strong fundamentals and sound execution, we remain confident in our ability to deliver sustainable long-term value. 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 briefly outlined earlier by Murat bey, 2025 was shaped by aircraft delivery delays, GTF engine groundings, and regional conflicts. Within this environment, we maintained a measured capacity expansion throughout the year and continued to de-deploy aircraft selectively. As a result, in the fourth quarter, passenger capacity increased by 11% annually, bringing full year growth to 7.5%. In 2025, transfer traffic expanded at a marginally faster pace than direct traffic, especially during the summer season, while demand from Latin America, Africa, and Asia to Türkiye showed notable strength. For the full year, our international market share reached 3.5%, reinforcing our position among leading global network carriers. Turkish tourism growth remained positive, and the country continued to attract international visitors.
This sustained demand environment, combined with our broad geographic presence, supported traffic performance across our network. Another important development last year was the scaling of TK Connect. What started as a commercial initiative has evolved into a structural shift into our distribution model. Direct channel penetration increased throughout the year, exceeding 80% of the sales. Direct distribution led to $60 million cost saving last year. From a regional perspective, Far East, Africa were our top-performing regions as the year progressed, with their performance further strengthening in the fourth quarter. In the Far East, demand remained firm throughout the year, with a 9% increase in capacity and a 2.6 percentage points higher load factor compared to 2024.
This performance was mainly driven by additional frequencies in Japan and Thailand, as well as in China following the expansion of our traffic rights. Strong demand in these markets allowed us to deploy the incremental supply effectively and maintain healthy load factors. We observe robust momentum entering into 2026 in Asia. Africa also delivered a strong performance. Following the capacity increase implemented earlier in the year, demand proved resilient across both transit and local segments. Newly launched routes, particularly in Libya, contributed positively, while growing connectivity between China and West Africa supported additional flows. In the fourth quarter, capacity in the region increased by around 12% while maintaining a balanced yield and higher load factor. Top-performing routes including Mauritius, Accra, Libya, and Dar es Salaam are set to support growth trajectory.
In Europe, competitive intensity remained elevated, driven by significant capacity additions from both legacy and low-cost carriers. Pricing pressure was more visible in northern and eastern markets, while Southern Europe showed relatively firm demand. Transit traffic provided partial support, direct flows from certain markets to Türkiye softened compared to last year's. Ex-currency basis yield declined by 6% annually. In North America, the impact of the U.S. policy changes negatively influenced ethnic travel appetite, most visibly in the third quarter. We reallocated part of our capacity toward Asia, where demand conditions were more favorable during the last quarter of the year. Latin America sustained its positive trajectory with routes such as Panama and Argentina performing strongly and supporting overall regional results.
Overall, looking at our key performance indicators for the full year, total passenger numbers increased by 8.8% to 90.6 million. Load factor improved by 1 percent point, reaching 83.2%, reflecting demand strength despite 7.5% capacity increase. Revenue yield and revenue per available seat kilometer, including cargo, decreased by the same amount, 1.4%. Although weakening dollar index was a major theme last year, its impact on unit revenues was not material at the network level, as indicated by the change differential between reported and ex-currency yields. In 2025, passenger revenues rose by 7.4%, especially with the momentum provided by the 13% increase in capacity in the fourth quarter. Turkish Technic's revenue contribution to the top line was remarkable in the last year.
External technical revenues increased by 44% for the fourth quarter and 25% for the full year, reflecting sustained demand for maintenance services amid ongoing production constraints and extended utilization of existing fleets. We expect this trend to continue in the following years given the limited new aircraft availability. On the cargo side, last quarter's performance was promising after the first nine months' challenging operating environment. In the fourth quarter, cargo revenues rose by 3% on the back of 16% higher cargo, with 11% erosion in cargo yields, indicating a 6 percentage points of sequential yield import improvement. In 2025, AJet strengthened its low-cost platform building on its rebranding and operational setup.
During the year, it carried more than 23 million passengers, with capacity increased by 16% and load factors improving 4 percentage points. Reflecting disciplined network developments and greater scheduled consistency despite ongoing GTF engine-related groundings. Revenue per available seat kilometer also improved by 4.4% as operations stabilized and the network became more balanced across domestic and international markets. Fleet modernization remains a central element of AJet's strategy. The share of new generation aircraft is expected to increase from around 40% towards 75% this year, enhancing fuel efficiency, unit cost advantage, and seat density. Revenue development over the year was largely driven by passenger operations, while cargo performance reflected the impact of trade restrictions. On the cost side, dynamics remained mixed, where Brent prices remained relatively supportive. Higher crack spreads elevated fuel costs in the last quarter.
Inflation levels and real appreciation of Turkish lira continued to put pressure on cost items, fortunately, to a lesser extent than 2024. As a result of these factors, profitability moderated on annual basis. For full year, profit from main operations amounted to around $2.2 billion, while EBITDA recorded flat at $5.7 billion. With the strong contribution from our portfolio returns, net income realized higher than operating profit and reached $2.9 billion. Looking specifically at fourth quarter, the deceleration in cost pressures translated into a notable recovery in profitability with an improvement of more than 20% year-over-year. During 2025, total cost per available seat kilometer increased by approximately 1% for the full year. Personnel expenses remained the primary driver, reflecting half-year inflation adjustment and 9 percentage point appreciation of Turkish lira.
We also saw a positive base effect since prior year include a one-off bonus payment amounting to $150 million. This supported a more moderate increase in personnel-related unit cost on an annual basis. Airport and air traffic-related unit costs remain elevated, mainly due to revised tariff structures at major European hubs and currency effects. Aircraft maintenance expenses reflected the operational impact of GTF engine groundings, keeping the ex-fuel unit costs under pressure, though the impact net-netted off by the compensation recorded on the operating profit line. Turning our balance sheet, on-hand liquidity increased by around $1.8 billion in 2025 to $9 billion. This improvement was mainly driven by stronger cash generation, along with new commercial borrowings to support and maintain financial flexibility for upcoming aircraft delivery prepayment.
Net debt increased to $8.3 billion at the end of the year. Higher figure was largely attributable to fleet and infrastructure investments, along with debt revaluation due to the weakening dollar against hard currencies. Despite this, leverage remains comfortably below our target range of 2.5 x. Currently, global travel appetite, except Middle East, is healthy. Geopolitical developments and fuel cost uncertainty are the key downside risk factors. In this environment, we project revenue growth broadly in line with the planned passenger capacity expansion. On the cost side, we expect ex-fuel cost to normalize, rising by a low single digit percent compared to 2025. Based on these assumptions, we anticipate an EBITDA margin between 22%-24% aligned with our midterm targets. Regarding sustainability, it remains a fundamental pillar of our long-term strategy.
Throughout 2025, we advanced our decarbonization roadmap by accelerating fleet renewal, expanding the use of Sustainable Aviation Fuel, and enhancing energy efficiency across our operations. These initiatives support our commitment to achieve carbon neutral operations by 2050. During last year, we further structured our SAF roadmap through strategic partnerships and preliminary agreements aimed at securing long-term supply and supporting domestic production capacity. In parallel, we maintained our focus on operational efficiency through a number of fuel saving initiatives implemented across the network. These efforts resulted in 67,000 tons of fuel savings and prevented 213 tons of associated carbon emissions. From a governance and transparency perspective, we enhanced our sustainability reporting framework. During the year, we published our first sustainability report prepared in accordance with IFRS sustainable disclosure standards, enabling investors to assess climate-related risks and opportunities in a globally comparable format.
Additionally, we introduced our board of directors diversity policy, targeting at least 25% female representation within five years as a part of our broader commitment to inclusivity. With this, we conclude our prepared remarks section. Now back to Rob for the investor questions.
Thank you, speakers. Indeed, ladies and gentlemen, we now move on to the question and answer session. Like I said at the start, we will take your questions. Just click the Q&A button, which you will see there at the bottom of your Zoom screen and submit your questions. There are no audio questions, so this is the only way you can ask our speakers questions. All right? Q&A button at the bottom of your Zoom screen and submit your questions. With that, back to our speakers for those written questions. Gentlemen.
Welcome back, Murat bey. Fatih, Head of Investor Relations here. We got a number of questions from our analysts, investors and this time, concerning the recent events from media as well. We got at least 20 or more questions, and I'm starting with the first question. Murat bey, could you comment on the last quarter's performance?
Sure. Thank you, Fatih. The especially the strong increase in the passenger load factor and belly cargo load factor, which was about 4 percentage points, passenger load factor was up by about 2 percentage points. These reflected a strong Christmas travel period. Cargo carried in terms of the volume was up by about 16%, it showed that there was a sustained market penetration in the air freight sector. The third-party revenue of our Turkish Technic, our MRO company, was also strongly up by about 40%. On the other hand, ex-fuel CASK decreased by 2% despite of the continuous increase of the previous 3 quarters. The decrease was by about 2%, mainly led by the lower personal CASK of about 9%. This was something mentioned by Fatih already.
The sales expense kept declining about 15% due to higher utilization of our direct sales channels, and we kept receiving some part of the Pratt & Whitney engine compensation. On the negative side, there was still some volatility, geopolitics in the region, and the cargo volumes was strongly up, but the yields were still down. In particularly on the cost side, the crack spread went up 19% which put a lot of pressure on our fuel expenses. Airport fees was up by about 20%, the CORSIA, United Nations' ICAO's initiative on self-utilization also started to bring in some additional costs in our fuel consumption. Over and all, the positive sides was stronger than the negative developments, and we had a, what we believe to be a strong fourth quarter result.
Murat bey, we have been getting, quite few inquiries from the recent developments. What impact do you expect from the war in the Middle East, and how are you managing the capacity?
This is definitely rather a challenging question as there are so many uncertainties. We don't have a clear idea how widespread the conflict is going to last and how long it is going to last. We are trying to, that's why, take our cancellations very short term. At the moment, all the Middle East region flights make about 6% of our capacity and revenue. Saudi Arabia and Oman are continuing. Flights there are ongoing. We have suspended many operations, namely of course Iran, Iraq, Syria, Lebanon, Kuwait, Bahrain, Qatar and Emirates. Before the war to this region, overall we had about 100 daily flights. Right now, with the continuation of Saudi and Oman mainly, we are having 35 daily operations. The situation is still very uncertain.
We are making the flight cancellations very short term. Just today we announced that Iran is going to be canceled until the 20th of March, Iraq, Syria, Lebanon until the 9th. Then the other countries are going to be evaluated daily. We hope to have more clarity about the direction of the events and have a more forward-looking guidance. At the moment it is quite challenging. On the financial impact, February is our lowest capacity production month. Together this year, in particular with the Ramadan starting in the last part of February and continuing into March, it's usually seasonally a low month of operations for us.
In addition, or sorry, in addition, until the 10th of March, we have been seeing some additional passenger Demand towards our network from Asia, passengers that want to travel to Europe in particular or westbound more generally saying. We feel, we believe this is a short-term demand as the passengers who are stranded in their destinations and who want to go back home or to their final destinations, it will be short-term. More long-term evaluation, it's going to take a little bit more while to evaluate the developments. On the cargo side, because of the sea traffic being stopped or affected on the negative side, we are seeing some increase in the yields as sea freight is being impacted. How permanent this impact is going to be is yet to be seen.
Lastly, you know, we have seen a huge increase in the Brent prices. Overall, if Brent stays around $80, $78-$80, and it's so volatile these days, we are expecting a monthly impact of about $70 million cost of the situation on our fuel expenses. If this current situation lasts for about a month, hypothetically, we would see about a $90 million revenue loss. Of course, the contribution margin and contribution loss is going to be smaller, but overall we can say roughly about a $100 million-$120 million loss could be expected if this uneasiness lasts up to a month. If it does last longer, then it will start to impact the Ramadan Eid holiday season and Easter in April, then we have to sit and make more thorough calculations.
Thank you, Murat bey. How many Airbus A321neo aircraft are currently grounded due to GTF problems? What is your current expectation for the year-end? Could you give us any color about the compensation amount?
We finished the year 2025 with about 39 aircrafts being grounded. As we have been repeatedly saying that Pratt & Whitney is putting hard work to solve the problem for good, but turnaround times are still long, induction periods are long in overhaul of these engines. Currently, we have 110 GTF-powered neo aircrafts. In the coming years, in 2026, the number of grounded aircrafts are likely to increase to maybe around 50 aircrafts. About the compensation, we have already had some compensation. For the follow-up, for the continuation of the issue, we keep our discussions with Pratt & Whitney.
Could you provide insights into current passenger booking trends, both network-wide and region?
Up until the recent, of course, development uneasiness in the region, the booking had been very strong actually. We have been seeing a strong demand environment, I could say, globally. In the first two quarters of into 2026, we were planning 10%-11% capacity growth. When we divide this into the regions, in Europe, about 7% in the first half capacity growth and yield evolution of about like 2 percentage points increase. In Far East, about 15% capacity growth. In particular, after we had the additional flight routes to China and the visa requirements being removed from Chinese tourists to Türkiye, we are expecting a strong demand from Far East to Türkiye. From Americas, about 4% capacity growth and about 1%, 0.1% increase in the yields.
Overall, on the international market, we were expecting about 10% capacity growth and 2% yield growth. In the domestic market, we were also expecting a strong growth, about 6.5% increase in capacity and roughly 1% increase in the yield evolution for the first half of the year.
Continuing with the next question. How do you see the tourism demand to Türkiye in 2026?
Last year, sorry, the growth was not strong. There was some maturization in the incoming demand to Türkiye. Over the last three years, we have had a very strong growth, passing 10% year-over-year and reaching to about 60 million, 59 million at the beginning of 2025. Last year, the increase was by about 3%. We had 64 million. We are expecting about 4%-5% increase. Of course, we'll see. It's going to be easier for us to make a projection on the incoming tourists after we have a bit more clarity on the developments in our region. Base scenario was 4%-5% increase in incoming tourists to Türkiye.
Also, could you compare premium cabin performance with economy segment during the fourth quarter? Do you see any regional differences?
Well, network-wide, we have been seeing a stronger premium segment performance than the main cabin. Demand, especially, is being driven in the long-haul segments from Americas and Far East to Europe region, in particular China, Hong Kong, and Australia on the Asian routes. In Americas, premium segment revenues grew by about 17 percentage points higher than the economy segment. In Europe, unit revenue change was 5 percentage points higher in the business class. Overall, in terms of yield, we saw a 5 percentage points higher yield growth in the business class than the economy class. This is partially has to do with the investment we have been making to advertise and advocate our business class.
Could you comment on the strength of the domestic traffic, given tightened monetary policy, and how it is contributing to overall performance?
Even though we have been still facing a relatively high inflation and high interest rate environment in Türkiye, in 2025, domestic air traffic, domestic travel demand was strong. The load factor increased by 5 percentage points, and the yield went up by 9% last year. Which shows domestic travel is resilient, mainly due to its attractiveness. You know, air travel makes a lot of the destinations in the country quite easily accessible. Going forward, in the first two months of the year, we saw a quite strong domestic traffic, and our target for the whole year is by an increase of 11% in terms of capacity going forward into 2026.
Continuing with cargo, how would you assess your performance last year, and what is your outlook for this year?
As I answered in the first question, the traffic demand was strong in 2025. We expect this to continue into 2026. We finished the year with about $3.2 billion, $3.4 billion, sorry, last year. We expect the revenue to go up by about 6%-8% and the total amount of cargo carried to go up by about 5%-6%.
What is your revenue and margin guidance for the full year?
This is going to be a little difficult. Excluding this recent Middle Eastern crisis, when we did the budget, our expectation, our guidance, based on our budget at the beginning of the year, we are targeting to increase our capacity in terms of ASK by 7%-9% this year. We expect the passenger demand to match this capacity and with stable load factors. Our total revenue is expected to increase by 6%-9%. Our EBITDA expectation is around $6 billion. EBITDA margin, we expect that to be between 22%-24%. I want to underline the fact that, you know, when we did the budget, our assumption on the Brent was around $65-$66, and jet fuel was around probably close to $800.
Current situation is much, much different than that, so it will have a lot of cons and maybe some advantages too, but all these are yet to be seen.
linked to the guidance, could you walk us through your expectations for fuel costs, and on what assumptions? Could you also share your hedging ratios?
During the, as I said, budgeting period, our expectation, our budget value of the Brent price was about $66. Currently, we have not made any estimation, but give or take at what we are seeing it is around $7 to $8 to $80 levels. How long it's going to stick at these levels is yet to be seen. What we can say is every any dollar increase on Brent results in about $50 million additional fuel cost. Our current hedge ratio for 2026 is around 34% and our break-even price is around $62.
Is it possible to provide an update on the status of the new collective bargaining agreements and when do you expect it to be finalized?
We started the discussions with the union about a month ago. The discussions are still continuing. We are expecting to come to a final decision, soon. At the moment, I can only say that the discussions are still, ongoing with the union.
Again, connected with this point, what are your ex-fuel unit cost expectations, this year, and does it incorporate any salary increases?
Well, the salary increase definitely, you know, we pay the salaries in Turkish lira, based on the impact of the inflation, even without any additional impact of the bargaining agreement, we would adjust the salaries at the rate of the inflation. For the beginning of the year, it would be around 12.5%-13% levels. Based on these inflationary adjustments and the other cost expectations, our ex-fuel CASK increase expectation for 2026 is low single digits or mid-single digits.
What is your anticipated fleet size this year, and would it be possible to share the entries and exits?
What we, well, with the updated aircraft delivery timelines, which we recently got the revision from Airbus and Boeing, our 2026 year-end fleet expectation is between 560-570 aircraft. This year, we are going to be receiving overall 85 aircrafts, and there will be 32 exits. If I divide this into our different operational groups, for TK, our flag carrier main network carrier, there will be 26 entries and four exits. For AJet, as they are highly renewing their fleet, they will have 58 entries and 26 exits. All these 58 entries are new generation aircrafts. It will allow AJET to have roughly 70% of its fleet in new generation aircrafts. In cargo, there will be one entry and two exits.
for the following years, as we have mostly completed our fleet expansion plan, for 2027, we expect to reach a overall total fleet size of around 610 and for 2028, 630s.
Your net debt increased materially in 2025. What were the key drivers to this, and how should we think about 2026?
Net debt increase in 2025, primarily due to the new aircraft deliveries. We had about 24 net growth this year. The capital expenses, in addition to the fleet expansion, we had infrastructure payments, and the Euro appreciation also affected our net debt. In 2024, we had quite a bit of wet-leased aircraft in the fleet, and they are not classified under financial lease debt, so they were in the operating expense part. This year, in 2025, we had operating lease and financial lease aircraft. Most of the wet-leased aircraft were returned, so this also contributed to attaining a higher debt.
Can you comment on AJet's performance, and what is your capacity plans?
I just said a few words actually about it. We are investing heavily in renewing the fleet of AJet, which has a big impact on reducing their ex-fuel CASK and also actually overall CASK. Despite the aircraft groundings due to the GTF engine issue, their capacity, passenger capacity was up by 24% in the last quarter of 2025. This year, we are expecting about 16% growth in the capacity. The load factor also, we are expecting that to improve from almost 80% to 84% levels. Number of passengers should also increase by about 15%-16% in 2026.
The Turkish Technic has been performing quite well in the last couple of years. Could you provide information for its contribution to profitability and your outlook over the next five years?
The Turkish Technic's revenue last year was up by 18%. It reached $2.6 billion. It was the third biggest MRO provider in Europe. In the same period, its profitability also increased by about 2 percentage points, which constituted around 10% of Turkish Airlines' total operating profit. We believe our recent collaboration with Rolls-Royce in establishing the engine overhaul facility in Istanbul, along with the new hangar investments in Istanbul Airport in particular, and a few other locations that we are investigating currently. These investments will contribute to Turkish Technic's profitability as the demand environment in MRO business is rather strong. By 2023, our 100-year anniversary, we are targeting to increase Turkish Technic's hangar capacity from around its current level of 60 aircraft to 120 aircraft in different airports in Türkiye.
Correspondingly, we expect Turkish Technic's revenue to reach from the current level of $2.6 billion - $8 billion. Its overall share in Turkish Airlines revenue should go up to 15%.
Going back to financials again, how did the appreciation of Euro affect your financials? Could you elaborate on the overall impact of US dollar weakness?
Euro's appreciation has a positive impact on our operating profit as our euro-based income exceeds our euro-based expenses. On the balance sheet side, we are short in euro because we have quite a bit of aircraft financing attained in euro denomination. The appreciation of euro against USD has a negative impact on the financial side. However, effect on operating profit compensates for this balance sheet impact, and overall impact of Euro appreciation had on net profit stays positive. We have $2.9 billion aircraft debt in also Japanese yen, another currency that we have a big exposure. However, our Japanese base income allows us to hedge this debt up to 45%. Thus, appreciating of the Japanese yen has some negative impact on the net profit.
Is there any update regarding Air Europa share acquisition process, and when should we expect to see synergies?
The application process in Spain, in EU, and some non-EU jurisdictions for the for the competition is continuing. Our target is to complete the whole regulatory processes by before the summer ends. If that would be the case, the expected synergies from this transaction should be started to seen towards the last quarter of 2026. Currently, we have our application. We have already submitted our application to Spanish Foreign Direct Investment Board, and also we have submitted at the very beginning of this year, at the end of January, to European Union's Foreign Subsidies Regulation, FSR. We have also provided draft to European Commission for Merger Control. You know, at full speed, we are continuing the application process.
What are your plans for share buyback and dividends?
Well, last year, you know, when we paid our first dividend, we expressed our intention to continue to do so as long as our financials are going to permit that. We are committed to shareholder returns within this framework. You know, last year we announced that as long as our EBITDA margin is higher than 22% and net debt to EBITDA is less than 2.5 x, we will be inclined to pay the dividend. We are working towards that. We have not made the announcement yet, but once we get the board approval at the amount and then the timing, we will be disclosing that information. We consider many factors when deciding on the share buybacks.
Considering our strong cash flow and peer multiples, I can say that our shares are trading far away from its intrinsic value. We prefer to signal the market with buybacks, which we recently have done some amount. When we see unwarranted share price formation due to some of the noises in the industry.
I didn't say the share. In all, we are expecting about 5%-7% payout ratio inclusive of maybe potentially some share cancellations. It could be possible. We have not really thoroughly finalized these evaluations yet.
How would you assess your return on invested capital trends given the step up in fleet investments and infrastructure CapEx? What would be your prediction in the next two to three years?
Our ROIC realized was around 12% last year, which was down by almost five percentage points from the highest level attained in 2022. Why it did decline? We have seen the normalization in profits after the post-pandemic demand surge. The competition is back its level where it was before the pandemic. There was a significant increase in invested capital as we invested our profitability to the company. According to our current projections, our profitability will stabilize between 22%-25% EBITDA margin in line with our long-term targets. In additions to our fleet and infrastructure will increase our efficiency as well. As a result, we project somewhere between 8%-12% ROIC going forward materially higher than the industry, which is around 7% levels.
Murat, we have one more question, stating that there have been some comments suggesting that Turkish Airlines is less affected by European Union's SAF, sustainable aviation fuel regulations compared to European carriers. Could you clarify the actual exposure to SAF obligations and how it compares with the EU airlines?
EU regulation is requiring currently mandatory SAF blending in all the flights departing from EU airports. This is regardless of the country where the airline is based. We are operating under this regulation completely the same situation with the all European carriers. On the top of this, Turkish Civil Aviation SAF Directive introduces a parallel obligation. SAF must be supplied and uplifted to all flights departing from Turkish airports, and this applies to all relevant departures from Türkiye and perfectly aligns with the EU regulation of 6% SAF blend by 2030. We are completely on the same boat with our EU peer airlines. As a result, we are obliged to purchase SAF for the flights departing from Türkiye, just as EU carriers must do for the flights departing from EU.
Furthermore, when Turkish Airlines operates from the EU airports, we are also subject to EU SAF obligations, meaning we face dual exposure. EU carriers are able to obtain certain incentives and emission grants from the governments. On top of that, they can reflect SAF costs to passengers, where we are not doing this. Therefore, it is not true to suggest that Turkish Airlines is less affected by the SAF regulations implemented in Europe.
Thank you, Murat. With this question, we conclude our earnings call. Thank you all for your participation. We look forward to being with you next quarter.
Thank you, speakers. Yes, indeed, ladies and gentlemen, we appreciate your participation, and we appreciate our speakers and the answering of the questions. Like was just said, that concludes today's conference call. Thank you for your participation. You may now disconnect.