TURKISH AIRLINES ANNUAL REPORT 2020

1 ANNUAL REPORT 2020 TURKISH AIRLINES ANNUAL REPORT 2020 The world aviation industry has experienced the worst period of its history due to the Covid-19 pandemic. Like all other companies in the sector, TURKISH AIRLINES was also affected by this highly negative operating environment. However, we are a flag-carrier airline that is deep-rooted, strong and resilient. We have seen and successfully navigated many crises over the years. As a result, we were able to overcome these latest challenges. As a close-knit family, we turned to each other first. We formulated and executed targeted strategies from the first day of the Covid-19 crisis. During this difficult time, we look toward the future with hope. We rank among those companies that recorded the lowest revenue loss during the pandemic thanks to our solid balance sheet structure. As life begins to return to normal, we are ready to take off again. Soon, history will start to look back on this pandemic era.

2 When that time comes, TURKISH AIRLINES will be seen as a company that confidently overcame the crisis in unity and solidarity. We soared the highest in the face of adversity driven by our commitment to Message from the Chairman18 TURKISH AIRLINES AT A GLANCE20 TO OUR SHAREHOLDERS20 Financial Analysis24 Sectoral Developments and 2021 Expectations30 Board of Directors33 Mission and Vision34 Strategies and Strategic Focuses36 TURKISH AIRLINES GROUP36 Subsidiaries and Affiliates46 Traffic Figures48 Fleet52 Flight Network54 Cargo60 Customer Experience66 Continuing Airworthiness Management68 Catering74 Ground Handling Services76 Training84 Flight Operations88 Istanbul Airport90 Corporate Innovation92 AnadoluJet94 Commercial Partnerships with AIRLINES , Traffic Rights and Expanding Flight Network98 Corporate Development and Information Technologies106 Human Resources108 Compliance Monitoring and Sustainability Management114 Corporate Communications118 Online Channels120 Financial Risk Management122 Organization Chart124 Statement of Compliance with Corporate Governance Principles125 Corporate Governance Principles Compliance Report129 Corporate Governance Information Form136 Statement of Compliance with Sustainability Principles137 Sustainability Approach and Incorporation s Sustainability Management139 Sustainability Principles Compliance Report144 Sustainability Principles Information Form158 Assessment of the Board of Directors on 2020 Results159 Assessment of the Board of Directors on the Effectiveness of Board Committees160 Legal Disclosures and Documents161 Statement of Independency164 Statement of Responsibility165 CONSOLIDATED FINANCIAL

3 RESULTS165 Consolidated Financial Statements as at and for the Year Ended 31 December 2020 with Independent Auditor s ReportContentsUnlike most other AIRLINES , we walk hand in hand with our employees saying We will not leave anyone behind. We took this strong brand to the greatest heights together. We also knew that we would overcome these challenges together by remaining closely knit. Once life returns to normal, this unity will be reflected in our business results as a competitive ARE OF ONE HEART WITH OUR 61 THOUSAND EMPLOYEESFor safe and healthy journeys, we have taken a wide range of measures to minimize any risk before, during and after the flight. In the health safety assessment carried out in partnership with APEX and SimpliFlying, TURKISH AIRLINES was deemed worthy of Diamond status the highest level. Our safe travel experience during the pandemic and hygiene measures were recognized internationally for their TOOK PREVENTATIVE MEASURES THAT WERE RECOGNIZED FOR THEIR EXCELLENCEDIAMOND AIRLINEBASED ON INDEPENDENTLY VERIFIED, VALIDATED, AND CERTIFIED AIRLINE PASSENGER HEALTH SAFETY CONFIRMSTURKISH AIRLINESAS AN OFFICIALP rior to the pandemic, TURKISH AIRLINES flew to 319 destinations around the globe more than any other airline.

4 In 2020, we grounded our aircraft due to the Covid-19 pandemic. However, we broke new ground globally by including 50 of our passenger aircraft in our 25-aircraft cargo fleet. As a result, we boosted our market share the most in cargo transport . We carried 1 out of every 20 shipments worldwide in 2020. Our goal is to grow our cargo business even more and transport 1 out of every 10 shipments globally!WE HOSTED CARGO INSTEAD OF PASSENGERSW hile conducting our business operations, we added significant value to Turkey s economy with USD 10 billion in foreign currency. In addition, we reunited TURKISH citizens stranded overseas with their home country during the pandemic. On some of our flights, the flight crew outnumbered the passengers we repatriated. We are also transporting vaccines, which require special care while in transit, to our home BROUGHT MORE THAN FOREIGN CURRENCY TO OUR COUNTRYOur domestic R&D and production efforts in civil aviation proceeded to move forward during this pandemic year.

5 TURKISH Technic successfully developed Turkey's first domestic and national server and modem, following on its domestically produced aircraft seats and galleys. We are committed to developing more products that differentiate from the competition with innovative features. In the future, we promise to introduce many new features, benefits and superior quality to air CONTINUE TO INNOVATE1312 TURKISH AIRLINES ANNUAL Repoff 2020 Message from the ChairmanDear Esteemed Shareholders, Customers, Business Partners and Employees,The Covid-19 outbreak, which emerged in China at the end of 2019 and affected the whole world in 2020, negatively affected the aviation industry as well as all other industries. This unprecedented crisis demonstrated once again that air transport is one of the vital sectors that keeps the wheels of the global economy turning. The pandemic also forced the aviation industry to face a critical issue: the importance of emergency response time and effective crisis the start of the coronavirus pandemic, TURKISH AIRLINES has maintained close contact with national and international aviation and public health authorities.

6 We have implemented every precautionary and preventative measure to ensure the health and safety of our passengers. In the same period, capacity management, resource management and risk management in the aviation sector were more challenging than ever before. TURKISH AIRLINES was able to better navigate the highly volatile and uncertain environment during the year and positively differentiate from the competition with its operational and financial results. We also expect a faster recovery in the coming year. Aviation Sector in 2020 The Covid-19 pandemic is widely seen as the biggest global crisis since World War II. The IMF estimates that the pandemic will result in a total loss of USD 22 trillion to the global economy between 2020 and AIRLINES was able to better navigate the highly volatile and uncertain environment during the year and positively differentiate from the competition with its operational and financial to September 2020 data of the Air transport Action Group (ATAG), by the beginning of 2021, the Covid-19 outbreak will cause some million people to become unemployed in the aviation industry about 43% of the sector s pre-pandemic workforce.

7 Together with other sectors related to air transport such as tourism, this figure is expected to climb to 46 million unemployed worldwide. November 2020 data of the international Air transport association ( iata ) indicates that total state aid to the global aviation industry has amounted to USD 173 billion. According to January 2021 data of the international Civil Aviation Organization (ICAO), the Covid-19 pandemic caused a 60% decrease in international air transport compared to the previous year. The pandemic brought the world aviation industry back to 2003 levels, reducing global air passenger numbers from billion in 2019 to billion in Navigated the Crisis Better Than Our Competitors The Covid-19 outbreak made its first major impact on the aviation industry in March 2020. One month later, the sector s global capacity supply had plunged 87% year-on-year due to the pandemic. The extreme uncertainty in travel demand has rendered demand forecasting very difficult.

8 Frequently changing tariffs, and therefore pricing, has made revenue management highly challenging for AIRLINES . TURKISH AIRLINES responded to this uncertainty in 2020 by switching to dynamic planning in passenger operations. As a result, we recorded the lowest decline in passenger numbers among our competitors, carrying about 28 million passengers and registering a decrease year-on-year. M. lker AYCIC hairman of the Board and the Executive CommitteeTotal Government Aid Received by the Global Aviation SectorTotal PassengersServed in the Global Aviation Sector in BILLIONPASSENGERS173 USD BILLION1514 TURKISH AIRLINES ANNUAL Repoff 2020 Message from the ChairmanWhile our peer AIRLINES posted an average load factor decline of 22 points, TURKISH AIRLINES reported a load factor of 71%, down only points. With this performance, we recorded the highest load factor of any airline in the world. For the period January-December 2020, Total Available Seat Km (ASK) was billion and TURKISH AIRLINES posted total Available Seat Kilometers (ASK) of 75 billion, down compared to a year earlier.

9 Our total passenger landings declined from 507,314 in 2019 to 240,339 in 2020, a decrease of Differentiated Positively from the CompetitionPassenger traffic was greatly reduced due to the Covid-19 pandemic in 2020. As a result, our passenger revenues fell by 66% to USD billion compared to a year earlier. TURKISH AIRLINES offset some of the loss in passenger revenue by focusing on exports and cargo. Cargo revenues jumped by 61% to USD billion in 2020. Meanwhile, passenger revenues fell 66%, down to USD billion. Total revenue decreased by compared to the previous year, and amounted to USD billion. In 2020, passenger revenues accounted for 56% of total revenue, while the share of cargo revenues climbed to 40% an all-time high. Due to the extremely challenging operational environment, TURKISH AIRLINES recorded an operating loss of USD 255 million in 2020. However, the Incorporation differentiated from its competitors with relatively minimal damage during this extraordinary pandemic year.

10 In fact, TURKISH AIRLINES successfully overcame the worst crisis in aviation history by recording the lowest loss among its competitors without receiving any government assistance. As of the end of 2020, Istanbul Airport made history as the facility serving the highest number of air passengers in Europe, surpassing London Heathrow and Frankfurt Maintained Our Solid Cash PositionOur competitors received billions of euros of state aid during the pandemic and greatly decreased their workforce. In contrast, TURKISH AIRLINES embraced its employees, stating We will succeed together, without leaving anyone behind, even when faced with the biggest crisis in aviation history. By successfully managing its equity, TURKISH AIRLINES reduced its expenses by 43% in 2020 compared to the previous year and posted cost savings of USD to effectively managing its 2020 cash flow with dynamic capacity management in passenger operations, engaging in successful equity management, recording a higher load factor and reporting a lower loss compared to its competitors, TURKISH AIRLINES exited the year with a cash position closely approximating that of year-end 2019.