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Expanding Turkish Airlines Will Boost U.S. Service

Stocks in this article: AAMRQ.PK DAL LCC UAL

ISTANBUL -- ( TheStreet) -- Turkey's continuing emergence as a world power is fueling expansion by Turkish Airlines, including more U.S. service.

In April 2013, the carrier will begin four-day-a-week service from its Istanbul hub to Houston. It also has plans to serve five additional U.S. cities: Atlanta, Boston, Detroit, Miami and Orlando. Currently, Turkish Airlines flies to Chicago, Los Angeles, Washington and New York Kennedy, which has three daily flights.

Turkish Airlines partners with United (UAL) and US Airways (LCC) in the Star alliance, but "nobody likes to transfer between planes," said Turkish Airlines CEO Temel Kotil, in an interview. "This is why in the U.S. many passengers stay home. It helps us to be a Star member, but our target is home to home."

As a hub, Istanbul has distinct advantages. Not only is Turkey's political and business importance growing, but also the city is an attractive tourist destination. Additionally, although Kotil said passengers don't like to connect, they sometimes have to, and from Istanbul they can connect to 187 cities in 88 countries around the world -- including Mogadishu, which is not served by any other carrier. "We link them to the world and we make a profit," Kotil said. Meanwhile, key markets in Germany and France are about three to four hours away.

Kotil noted Turkish Airlines' 187 destinations make Istanbul the second largest hub in the world in terms of single carrier destinations, after Atlanta, where Delta (DAL) has 200 destinations. Dallas, where American (AAMRQ.PK) has 171 destinations, is third.

Turkish Airlines has 370 daily departures from Ataturk International Airport and carries about 80% of the traffic.

In the first half of 2012, revenue rose 36% to $3.7 billion, capacity grew by 19% and the carrier reported a profit of $90 million. Revenue per kilometer rose 24%. The fleet of 184 Boeing and Airbus planes, averaging about six years in age, has grown from 62 aircraft in 2003. The carrier is 49%-owned by the Turkish government; its shares trade on the Istanbul Stock Exchange. Shares are up about 70% this year.

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