I would like to begin by expressing the incredible sadness I felt due to the earthquake disaster in our country. I wish God's mercy on those who lost their lives and strength to our people who survived with injuries.
With this disaster, we once again witnessed how important the role of aviation is during a natural crisis like this] when highways are damaged and there is a major race against time to help and rescue people. Many airlines from around the world have made exceptional efforts – above and beyond – to provide aid and transportation to earthquake zones. At Hitit, we continue to maintain our technology service, which is one of the most important elements of aviation.
In our industry, the operational and technological side of the business is always at the leading edge of what we do. You may ask why a CFO is making a statement, especially when we are leaving behind the last two years that hurt us all –business understandably wasn’t that great. Because the aviation sector has reached a positive pivotal point, we can now make sound projections that comfortably exceed the passenger figures of the past years. Hitits’s 2022 figures in particular really prove this. Long story short, I am writing this blog to say that good things are happening, and I am happy to share our expectations for 2023 with you here at Hitit.
Summary of 2022 for the Aviation World
I believe everyone involved in the aviation industry has read more than enough about passenger numbers declining over the past two years. Enough ‘doom & gloom, now it is time to see the ‘flip side of the coin – speaking proverbially!
Fast-forward two years, and we’re already seeing signs of stability returning as passenger numbers steadily pick up steam. According to IATA data, global air passenger traffic in 2022 reached 68.5% of pre-pandemic (2019) levels. This is a major improvement, especially so in international traffic, which increased YoY by 152.7% in 2022 compared to 2021. It’s anticipated that by 2023 this number will surge even higher, surpassing pre-pandemic numbers sometime during 2024 according to IATA's latest figures. Ultimately, recovery will depend upon numerous factors beyond our control – yet encouraging projections indicate that the aviation industry is shifting into its final phase from whence air travel can regain its previous power and reach!
How was 2022 for Hitit ?
Hitit has stood by its Partner airlines from the very beginning, demonstrating its committed cooperation with the industry and its ecosystem. This has created a pure loyalty between Hitit and its Partners. With Hitit's positive support for its Partners, combined with its technological capability, things started to change positively for us. Hitit, which has always been ready to give more than it receives in the aviation sector, is now in an advantageous position vis. its peers, thanks mainly to the winds of change that had already started to blow with the pandemic.
As a result, in 2022 we signed 16 new Partner agreements, expanding our reach to 47 countries while increasing the number of Partners we serve to 64. The number of invoiced passengers, which is the main data showing the size of our sector, increased YoY by 42%. This growth was driven by the increase in business volumes of existing partners as well as new agreements and resulting Partners onboarded.
The increase in the number of our partners and passengers billed accordingly had a positive impact on Hitit's FY2022 financial report. Sales revenues for Q4 2022 increased by 30% compared to last year and reached a total of US $18.8M. Thus, the turnover was 14% above the pre-Covid period in 2019. Our EBITDA margin increased by 43%. The 34% increase in turnover, 46% EBITDA margin and 41% net profit rate that we achieved in the last quarter, had a major impact on the realization of these results.
85% of our total revenue is earned in foreign currency
Hitit has a successful international growth strategy, which has resulted in 85% of our total revenues being earned in foreign currency and only 15% in Turkish Lira (TL). Furthermore, 83% of all our spending is done in TL. This has created a sort of "natural hedge" against external market fluctuations. With this protection, we are able to continue operations without additional borrowing, thus allowing us to uphold our dual commitment to financial responsibility and maintaining long-term solvency.
We endeavour to increase the rate of foreign exchange earnings by actively engaging with key aviation industry organizations – at both national and international level – to promote Hitit more effectively, world-wide.
Hitit’s investments pay off
After our IPO in March 2022, Hitit experienced a successful period of rapid growth and progress. During this period, Hitit has made investments in R&D totalling US $6.4M, plus a further US $3.8M dedicated to the strategic purchase of licenses, hardware, and fixtures. We have transferred our experience in the field of Artificial Intelligence to other investments. To date, our improvements in optimization algorithms have been both well-received and used by our Partners. We also signed an investment contract for our ADS (Agent Distribution System), which gives us retailing capabilities within the airline market.
Our growing global presence
We are also pleased to announce that we are progressing towards opening an office in the Netherlands in 2023. This branch will provide us with the opportunity to be closer to our customers and expand our operations into Europe, North America, and South America.
All these investments play a pivotal role in increasing the competitive edge of our solutions, creating new business lines with tremendous growth prospects. We truly believe these smart moves will help us take our Company to the next level - through expansion that goes beyond borders, entering new markets, and increasing our market share in countries where we already exist!