#1©2016 Turkish Airlines All Rights Reserved. WIDEN YOUR TURKISH WORLD AIRLINES TURKEY: RECENT DEVELOPMENTS January - December 2017 DOLMABANGE TURKISHA#23 581 4 698 Source: Turkstat, CBRT 5 961 950 934 Per capita GDP tripled while nominal GDP quadrupled in last 15 years Nominal GDP (bn USD) Avg. GDP Growth (2003-'16) Turkey → 5,6% Real GDP Growth (Index: 2002=100) 275 872 858 862 829 250 762 769 225 675 643 549 200 500 Poland 3,8% Romania 3,5% 404 311 237 175 150 Czechia 2,7% Hungary 1,1% 7 304 7 906 9 656 Per capita GDP (usd) 10 931 100 2002 2004 2006 2008 2010 2012 2014 2016 2002 2005 2008 2011 2014 2017 2020 086 8 10 560 11 205 11 588 12 480 2002 2004 2006 2008 2010 2012 2014 2016(r) 2 12 112 11 019 10 883 125 Avg. Real GDP Growth (%) 6,4 3,7 Steady & increasing growth 4,9 1999 - 2004 2005 - 2010 2011-2016 TURKISH AIRLINES WIDEN YOUR WORLD#355 Jan 15 May 15 45 Jan 15 May 15 48 88 Sep 15 Jan 16 51 49,6 54 بھر May 16 80 75 70 67,7 65 60 ли Consumer Confidence Index Sep 15 Jan 16 * Monthly data is averaged for each quarter. Latest figure: December 17 Source: Turkstat, CBRT, Bloomberg May 16 Sep 16 Jan 17 May 17 3 Sep 17 Jan 18 95 Jan 15 May 15 Sep 15 100 101,7 Jan 16 May 16 105 Sep 16 AIRLINES TURKISH WIDEN YOUR WORLD Sep 16 72,3 110 Jan 17 May 17 Sep 17 Jan 17 Jan 18 May 17 115 Sep 17 57 57 Jan 18 Turkish economy recovered rapidly by V-shape growth PMI Manufacturing Index Industrial Production Index (seasonally adjusted)* 140 55,7 130 120 110 100 90 80 84,7 70 2005 - 1Q 3Q 2006 - 1Q 3Q 3Q 3Q 3Q. 3Q Real Sector Confidence Index 110,8 3Q: 3Q. 3Q 3Q 2015 - 1Q за 2016 - 1Q 3Q 2017 1Q. 3Q 135,6#4Favourable Demographics: Half of population under age 30 TURKEY EUROPE 100+ 80-84 90-94 70-74 80-84 70-74 60-64 60-64 50-54 50-54 40-44 40-44 30-34 30-34 20-24 20-24 10-14 10-14 0-4 0-4 0,05 0,03 0,01 0,01 0,03 0,05 0,05 0,03 0,01 0,01 0,03 0,05 Females Males ■Males Females 120 115 110 105 100 95 90 Working Age Population (15-64) (Index: 2014=100) 75 Turkey 70 65 60 55 50 Total Dependency Ratio (%, Age: 0-14 & >64 / Age: 15-64) Europe Turkey Europe 85 45 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 Source: Turkstat, Eurostat, UN, 2016 4 TURKISH WIDEN YOUR WORLD AIRLINES#5High potential with young population and improving workforce Employment (mio) 9 million jobs created in last 10 years 27 26 25 24 23 22 21 20 21 20 22 27 29 Jan-Nov 2017 1.310k 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Nov 25 Unemployment rate (%) Labor Participation Rate (%) 60 50,5 51,3 52,0 52,8 48,3 20 47,4 47,6 44,5 44,3 44,9 45,7 46,5 50 13,1 15 11,1 10,0 9,0 9,2 9,1 8,4 90 40 10,3 9,9 10,3 10,9 9,0 10 30 5 20 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 - Nov Source: Turkstat 5 New job creation in 2017 is nearly 2x of previous 10 year average. 2006-16 avg. 688k TURKISH AIRLINES WIDEN YOUR WORLD#6Strong fiscal discipline has been the main pillar of economic policy Budget Deficit (%GDP) 9 6 3,5 2010 Maastricht criterion: 3% 1,3 33 1,9 1,0 10 1,7 1,1 1,1 1,0 2011 2012 2013 2014 2015 2016 2017 * Latest figure: September 2017 Peers' Budget Deficit (%GDP) General Government Debt Stock (%GDP) 89,5 91,4 91,9 90,0 89,0 86,1 87,4 83,8 Eurozone 9,5 9,0 7,3 3 5,3 Maastricht Turkey 4,2 4,8 5,2 4,9 3,7 4,1 -5,24,7 criterion 4,1 40,1 3,5 3,8 36,5 2,9 32,7 2,4 2,4 2,5 2,6 2,4 31,3 0 2010 2011 2012 2013 2014 2015 2016 Brazil ■S. Africa Poland 28,7 27,5 28,1 27,9 T 2010 2011 2012 2013 2014 2015 2016 2017 Turkey Eurozone Source: Bloomberg, IMF Data Mapper 6 TURKISH WIDEN YOUR WORLD AIRLINES#7Decreasing trade gap with diversified export markets 0,8% Turkey's Share in World Total Export 0,9% 0,8% 0,9% 0,8% 1,0% 46 46 Exports (% of total) 48 47 47 44 43 42 39 28 23 22 22 22 23 21 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2017 EU Near and Middle Eastern Trade Balance (bn USD) 27% drop 105 99 83 84 77 63 56 252 242 241 237 234 15,9% 207 199 152 135 152 158 157 144 143 2011 2012 2013 2014 2015 Total Imports Total Exports *Latest figure: December 2017 Source: Bloomberg, Turkstat 2016 Foreign Trade Gap 2017 7 Composition of Imports (%) 2007 11,0% 73,1% Intermediate Goods Capital Goods ■Consumption Goods 14,2% 2017 12,2% 73,6% TURKISH AIRLINES WIDEN YOUR WORLD#8Current account deficit is steadily decreasing Current Account Deficit (% GDP) Turkey's Share in Global FDI Inflows 1,6% 9,0 1,4% 1,2% 5,7 5,4 ཁ 6,7 5,8 5,5 5,1 1,0% 4,7 4,7 4,2 3,5 42 0,8% 3,7 3,8 0,6% 0,7% 1,8 0,4% 0,4% 0,2% 0,0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 * Latest figure: Q3, 2017 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 35 25 15 5 -5 Portfolio Inflows (12-month cumulative, bn USD) -15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ■ Equity Source: Bloomberg, CBRT ■Security 8 00 35 30 25 20 15 10 5 0 Foreign Direct Investment Inflows (12-month cumulative, bn USD) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 TURKISH AIRLINES WIDEN YOUR WORLD#9Central bank is implementing tight monetary policy CBRT Interest Rate Corridor (%) CBRT Funding Composition (billion TRY) 160 14 12 10 8 6 Jan-16 80 60 40 20 ཤྲཱ ཤྲཱ ཎྜ ཎྜ ྂ ྴ ྨ ༠ 140 12,75% 120 100 Jul-16 Overnight Lending Rate 1-week REPO Rate Late Liquidity Window Lending Rate Jan-17 Jul-17 Overnight Borrowing Rate Jan-18 CBRT Average Funding Rate - 5 day MA Jun-16 Dec-16 Jun-17 One Week Repo Overnight Lending Dec-17 I Late Liquidity Window Net Open Market Operations The rise in inflation is expected to be temporary USD/TRY EUR/TRY Basket (0.5 EUR & 0.5USD) 16 4,8 14 4,6 4,4 12 Annual CPI (%) 4,2 umm 10 10 10,4 4,0 40 3,8 8 3,6 6 3,4 3,2 4 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Source: Bloomberg, CBRT TURKISH AIRLINES WIDEN YOUR WORLD#10L Argentina T Turkey Hungary Indonesia Mexico 5 4 3 2,4 2,2 2,1 2,0 2 Brazil Russia Canada Czech Rep. China Ireland Netherlands Source: IMF FSI Latest Available Data for Each Country 0 10 5 Ireland Netherlands Indonesia UK 15 30 27 23 23 20 France Brazil Austria Poland Belgium Germany Czech Rep. Capital Adequacy Ratio (CAR) (%) 55 47 45 35 19 19 18 18 18 18 17 17 17 17 16 16 16 15 15 15 15 14 13 13 13 12 Well capitalized, strong banking sector attracts foreign interest Non-performing Loans to Total Gross Loans Greece Turkey Hungary Argentina Japan Mexico Italy Canada Return on Assets (ROA) (%) 50 4.5 39 40 40 1,3 1,2 1,1 1,1 1,0 1,0 0,8 0,8 0,7 0,6 0,6 0,4 0,4 0,4 0,3 0,3 0,3 0,3 0,2 Poland Spain Belgium Austria France USA Germany Italy Portugal India UK Japan Greece 10 -10 0 Canada Argentina Hungary Turkey 30 Spain USA Portugal India China Russia 5 50 -5 Italy Greece 16 16 12 10 10 Ireland Portugal Russia India Spain (NPL) (%) Poland Czech Rep. Hungary Brazil France Mexico■ Turkey Austria Netherlands Belgium Indonesia UK I USA Japan Germany China■ Argentina■ Canada + + 3 3 3 3 N 2 2 N 2 2 T L 0 5 Return on Equity (ROE) (%) 22 21 20 20 18 16 14 14 12 10 10 8 8 8 8 7 7 5 5 544 Mexico Indonesia Czech Rep. China Netherlands Brazil Russia Belgium Spain Poland Austria Ireland France Japan Germany TURKISH WIDEN YOUR WORLD Italy India UK Portugal USA Greece#116,4 The banking sector grew as a result of its strong asset quality and was able to maintain high profits Non-Performing Loan Ratio (%) 5,0 3,9 3,6 * Latest figure: December 2017 3,8 5,6 3,8 2,8 2,9 2,8 2,9 3,2 3,4 3,1 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Target Rate of %12 Capital Adequacy Ratio (%) Banking Sector Total Asset (billion TL) 3.258 3.400 2.900 2.731 2.357 2.400 1.994 1.900 1.732 1.371 1.400 1.218 1.007 900 2010 2011 2012 2013 2014 2015 2016 2017 20 19,0 16 17,9 16,9 16,6 16,3 15,3 15,6 15,6 11,28 12 Legal limit of %8 2010 * Latest figure: December 2017 Source: BRSA 8 4 1,16 0 2011 2012 2013 2014 2015 2016 2017 Dec-2015 11 Profitability Ratio (%) 1,5 Dec-2016 14,28 ■Net Income / Average Total Assets (%) Net Income / Average Shareholder's Equity (%) 1,63 Dec-2017 TURKISH AIRLINES WIDEN YOUR WORLD 16,04#12Tourism revenues and number of visitors doubled between 2004-2014. Strong recovery has expected to continue in 2018! # of Visitors vs. Revenues 20 20 17 12 24 24 23 20 20 19 27 27 31 32 33 33 21 21 25 25 25 25 Turkey Foreign Arriving Visitors (YOY,%) 60 41 42 39 39 36 36 40 40 31 34 32 31 28 29 25 25 20 0 26 22 22 -20 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Revenue (bn. USD) # of tourists (mio) 5,0 50 4,5 45 40 4,0 3,5 2004 Direct Contribution to GDP* (%) 2007 *Based on WTTC data Forecast -40 -60 38,5 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 100 75 50 25 Tourism Revenue* Forecast TURKISH WIDEN YOUR WORLD AIRLINES 0 2010 2013 2016 2019 2022 2025 2004 2007 2010 2013 2016 2019 2022 2025 * USD in bn, based on WTTC data Source: Turkstat, WTTC 12#13Air traffic more than tripled in last 10 years mio 1,5 billion people and $24T GDP at 4 hour flight-distance 250 SFO LAX Passengers Carried (Turkey) Domestic Wide Body Range 200 International Total 150 100 193 181 174 166 149 130 118 103 86 79 70 70 IAH O MEX ORD ATLO HAV JFK YYZ YUL MIA IAD BOS PTY CCS BOG 0 56 62 45 50 NRT KIX ICN РЕКО PVG 0 TPE MNL CAN 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 HKG SGN HKTO BKK KUL ISTANBUL 12.000 SIN CGK 11.000 10.000 GRU EZE MPM TNR MRU JNB DUR CPT Weekly Flights 4x growth in fleet, 5x growth in pax, 3x growth in # destinations since 2005 2016-334 63mn pax 55mn pax 9.000 2014-214 2015 -299 48mn pax 2017-329 Aircraft 69 mn pax 8.000 2013-214 61.2 mn pax 39mn pax 7.000 6.000 5.000 Narrow Body Range 4.000 17m pax 14m pax 3.000 2005- 83 23m pax 2008-127 2007-101 2006-103 33mn pax 2012-202 29mn pax 2011-180 25mn pax 2010-153 2009-132 20m pax 2.000 Destinations Turkish Airlines connects you to 301 destinations in 121 countries 1.000 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 310 320 *As of 31.12.2017. Note: Diameters of the bubbles are proportional to the number of passengers carried. Source: Turkstat, Turkish Airlines Investor Presentation 13 TURKISH AIRLINES WIDEN YOUR WORLD#14DISCLAIMER Türk Hava Yolları A.O. (the "Company" or "Turkish Airlines") has prepared this presentation for the sole purpose of providing information about recent macroeconomic developments in Turkey and its business, operations, operational and financial results. The information in this presentation is subject to updating, revision and amendment. This presentation is not, and does not support to be comprehensive and to contain all information related to Turkish economy and Turkish Airlines. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any Turkish securities including Turkish Airlines, its subsidiaries or their respective affiliates nor should it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto. This presentation is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be contrary to law or regulation. The information contained in this presentation has not been subject to any independent audit or review and may contain forward-looking statements, estimates and projections. Statements herein, other than statements of historical fact, regarding future events or prospects, are forward-looking statements based on several resources. Although the estimates and projections reflected in the forward- looking statements are reasonable, it does not mean that they are facts. These estimates or projections may prove materially incorrect, and actual results may materially differ. As a result, you should not rely on these forward-looking statements. Turkish Airlines undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. Any forward-looking statement in this presentation speaks only as of the date on which it is made, and Turkish Airlines undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except to the extent required by law. Information about general economy, industry and market together with forecasts used in this presentation were obtained from several resources, including central banks, statistical institutes, respective banks' reports, internal research, publicly available information, industry publications and other market commentaries. The information contained therein has been obtained from sources believed to be reliable at the relevant time, but that the accuracy and completeness of such information is not guaranteed. Similarly, internal research, market research, industry publications and other publicly available information, while believed to be reliable, have not been independently verified, and Turkish Airlines does not make any representation as to the completeness or accuracy of such information. No representation, warranty or undertaking, expressed or implied, is or will be made by Turkish Airlines or its shareholders, affiliates, advisors or representatives or any other person as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained in this presentation (or whether any information has been omitted from this presentation). Turkish Airlines, to the extent permitted by law, and each of its respective directors, officers, employees, affiliates, advisors or representatives disclaims all liability whatsoever (in negligence or otherwise) for any loss however arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection with this presentation. This presentation should not be construed as financial, legal, tax, accounting, investment or other advice or a recommendation with respect to any investment. Under no circumstances is this information and material to be construed as a prospectus, supplement, offering memorandum or advertisement, and neither any part of this presentation nor any information or statement contained herein shall form the basis of or be relied upon in connection with any contract, commitment or investment decision. By reading this presentation or attending or listening to any relevant meeting, conference call or webcast organized by the Company, you agree to be bound by the above provisions. 14 TURKISH AIRLINES WIDEN YOUR WORLD#15THANK YOU WIDEN YOUR TURKISH WORLD AIRLINES