Pegasus Hava Tasimaciligi Anonim Sirketi : 2024 Annual Activity Report

Published: 2025-03-05 00:21:04 ET PGSUS.E.IS

PEGASUS HAVA TAŞIMACILIĞI ANONİM ŞİRKETİ

ACTIVITY REPORT OF THE BOARD OF DIRECTORS

FOR THE PERIOD BETWEEN JANUARY 1 - DECEMBER 31, 2024

MARCH 4, 2025

Genel (Public)

Güney Bağımsız Denetim ve SMMM A.Ş.

Tel: +90 212 315 3000

Maslak Mah. Eski Büyükdere Cad.

Fax: +90 212 230 8291

Orjin Maslak İş Merkezi No: 27

ey.com

Daire: 57 34485 Sarıyer

Ticaret Sicil No : 479920

İstanbul - Türkiye

Mersis No: 0-4350-3032-6000017

(Convenience translation of a report originally issued in Turkish)

INDEPENDENT AUDITOR'S REPORT ON THE ANNUAL REPORT OFTHE BOARD OF DIRECTORS To the Shareholders of Pegasus Hava Taşımacılığı Anonim Şirketi

We have audited the annual report of Pegasus Hava Taşımacılığı Anonim Şirketi ("the Company") and its subsidiaries ("the Group") for the period of 1 January - 31 December 2024.

In our opinion, the consolidated financial information provided in the annual report of the Board of Directors and the discussions made by the Board of Directors on the situation of the Group are presented fairly and consistent, in all material respects, with the audited full set consolidated financial statements and the information we obtained during the audit.

We conducted our audit in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and Independent Auditing Standards (InAS) which are part of the Turkish Auditing Standards as issued by the Public Oversight Accounting and Auditing Standards Authority of Turkey (POA). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Annual Report section of our report. We are independent of the Group in accordance with the Code of Ethics for Independent Auditors (Code of Ethics) as issued by the POA, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We have expressed an unqualified opinion in our auditor's report dated March 4, 2025 on the full set consolidated financial statements of the Group for the period of 1 January - 31 December 2024.

In accordance with Articles 514 and 516 of the Turkish Commercial Code 6102 ("TCC") and the provisions of the Communiqué II-14.1 on the Principles of Financial Reporting In Capital Markets" ("the Communiqué") of the Capital Market Board ("CMB"), the management of the Group is responsible for the following items:

When preparing the annual report, the board of directors takes into account the secondary legislative arrangements published by the Ministry of Customs and Trade and related institutions.

A member firm of Ernst & Young Global Limited

(Convenience translation of a report originally issued in Turkish)

Our aim is to express an opinion, based on the independent audit we have performed on the annual report in accordance with provisions of the Turkish Commercial Code and the Communiqué, on whether the consolidated financial information provided in this annual report and the discussions of the Board of Directors are presented fairly and consistent with the Group's audited consolidated financial statements and to prepare a report including our opinion.

The independent audit we have performed is conducted in accordance with InAS and the standards on auditing as issued by the Capital Markets Board of Turkey. These standards require compliance with ethical provisions and the independent audit to be planned and performed to obtain reasonable assurance on whether the consolidated financial information provided in the annual report and the discussions of the Board of Directors are free from material misstatement and consistent with the consolidated financial statements.

The name of the engagement partner who supervised and concluded this audit is Kaan Birdal.

Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi A member firm of Ernst & Young Global Limited

Kaan Birdal, SMMM

Partner

March 4, 2025 İstanbul, Turkey

(2)

A member firm of Ernst & Young Global Limited

PEGASUS HAVA TAŞIMACILIĞI ANONİM ŞİRKETİ

ANNUAL ACTIVITY REPORT OF THE BOARD OF DIRECTORS

FOR THE PERIOD JANUARY 1 − DECEMBER 31, 2024

This Report is prepared in accordance with the Regulation on the Determination of the Minimum Content of Company Annual Reports published by the Turkish Ministry of Trade, the Corporate Governance Communiqué No. II-17.1 and the Corporate Governance Principles published by the Turkish Capital Markets Board and other applicable provisions of Turkish law.

As used in this Report, the following terms shall have the meanings indicated below:

1- GENERAL INFORMATION

A- GENERAL INFORMATION ON PEGASUS AIRLINES

Reporting Period

: January 1, 2024 - December 31, 2024

Commercial Title

: Pegasus Hava Taşımacılığı A.Ş.

Trade Registration

: Istanbul Trade Registry / 261186

Central Registry No.

: 0-7230-0470-8500017

Headquarters

: Aeropark, Yenişehir Mahallesi, Osmanlı Bulvarı, No: 11/A

Kurtköy 34912 Pendik / Istanbul

Contact Information

: Telephone. +90 216 560 7000

Corporate Website. www.flypgs.com

Investor Relations Website.

http://www.pegasusinvestorrelations.com

B- VISION, MISSION, AND STRATEGIC TARGETS OF PEGASUS AIRLINES

We operate in line with the strategic targets under the auspices of our Board of Directors in accordance with our aim of being: "To be a leading low-costcarrier across the industry, providing safe and easy travel with low fares" and our motto: "Everybody has the right to fly."

Our strategic targets are underpinned by our key corporate values: Innovation, People Orientation, Competitiveness, Result Orientation, and Effectiveness & Efficiency.

Genel (Public)

Our annual budget is approved by our Board of Directors before each fiscal year. Our operational and financial results are monitored by the Board of Directors on a regular basis, against budgeted targets. The Board of Directors reviews our strategic targets and the Company's progress in terms of strategic key performance indicators on a regular basis.

Our value model, first developed in 2024 and shown below, provides a more holistic approach on the value impact of our business. For more information on our value model, please refer to the 2023 Pegasus Airlines Sustainability Report.

C- CAPITAL, SHAREHOLDING AND ORGANIZATION STRUCTURE OF PEGASUS AIRLINES

Our issued capital is ₺500,000,000 and our authorized capital ceiling is ₺500,000,000. Our issued capital was increased from TL 102,299,707 to TL 500,000,000 on May 31, 2024, following a 388.75995% bonus share issuance. Information on our capital and shareholding structure as of January 1, 2024, and December 31, 2024, respectively, is shown in the table below.

January 1, 2024

December 31, 2024

Number of

Shareholding

Number of Shares

Shareholding

Shareholder

Ratio

Esas Holding

57,959,838

56.66%

264,056,018

52.81%

Publicly Traded

42,482,689

41.53%

226,866,830

43.57%

Emine KAMIŞLI

619,060

0.61%

3,025,717

0.61%

Ali İsmail SABANCI

619,060

0.61%

3,025,717

0.61%

Kazım KÖSEOĞLU

309,530

0.30%

1,152,859

0.30%

Can KÖSEOĞLU

309,530

0.30%

1,152,859

0.30%

Total

102,299,707

100.00%

500,000,000

100.00%

As of December 31, 2024, Esas Holding is the controlling shareholder of Pegasus Airlines. Established in 2000, Esas Holding is the largest family-owned investment firm in Türkiye and is backed by the first- and second-generation family members of Şevket SABANCI, one of the five founding members of H. Ö. Sabancı Holding A.Ş., a leading Turkish conglomerate. With

Genel (Public)

offices in Istanbul and London, Esas invests in various asset classes globally including private equity, real estate, venture capital and public markets.

Our Company's management organization chart as of December 31, 2024, is provided in Section 1/F of this Report.

D- INFORMATION ON BUSINESS ACTIVITIES

We are a globally leading low-cost airline based in Türkiye. We operated charter flights since 1990. Following our acquisition by Esas at the beginning of 2005, we changed our business model, introducing a low-cost network carrier model for the first time and focused on providing affordable and on-time air travel service with a young fleet.

As a result of the successful implementation of this low-cost strategy, we experienced rapid expansion of our operations both in domestic and international routes. Between 2009 and 2019, our cumulative average annual passenger growth reached 18%, significantly outpacing the 9% annual average growth recorded by the Turkish market. The international travel restrictions introduced due to COVID pandemic negatively affected the demand through 2020 and 2021. Parallel to the gradual easing in restrictions starting 2022, we recovered back our capacity and recorded 18% CAGR in number of passengers in the 2022-2024 period, outpacing the 13% CAGR realized in the total Turkish market. We operate a growing young and modern fleet of 118 aircraft with 4.49 average aircraft age as of December 31, 2024.

We provide high-frequency services on short- and medium-haul, point-to-point, and transit routes on its domestic and international network primarily from our main hub in Istanbul Sabiha Gökçen International Airport. As of December 31, 2024, we offered scheduled passenger services on 37 domestic routes in Türkiye and 109 international routes to European (including North Cyprus), CIS, Middle Eastern and African destinations, serving a flight network covering 146 destinations in 53 different countries.

Our business model is based on a strong focus on efficient operations and cost control, and revenue generation through various services ancillary to the core air passenger services. In 2024, our CASK, non-fuel was recorded as €c2.55, while revenue recorded from ancillary services constituted 34% of total revenue for the period. In 2024, we continued to derive revenue from other services, primarily consisting of cargo services and a relatively low volume of charter and split charter flights for tour operators, which represented 2% of total revenue for the period.

We rank among the best performers in the airline industry globally on the cost efficiency and operating profitability fronts. In 2019 which is used as a benchmark year for the industry for demonstrating the "last normal year before COVID pandemic", we stood out among the global airlines with a CASK non-fuel figure of EURc2.06 and an EBITDA margin of 33.3%. We repeated our performance in the post-COVID era, from 2022 to 2024 (CASK non fuel - 2022: EURc2.18, 2023: EURc2.26, 2024: EURc2.55. EBITDA margin - 2022: 34.1%, 2023: 31.4%, 2024: 28.4%).

E- INFORMATION ON PRIVILEGED SHARES

We do not have any privileged shares. Therefore, there are no voting privileges attached to Pegasus Airlines shares or any preference in respect of the nomination of Board members or the allocation of any distribution or payment to be made from Company profits.

Genel (Public)

F- INFORMATION ON THE MANAGEMENT BODY, SENIOR MANAGEMENT AND PEGASUS AIRLINES EMPLOYEES

Three independent members served in our Board of Directors in 2024. They were appointed at the General Assembly Meeting in Marh 28, 2024. All independent Board members were nominated by the Corporate Governance Committee, and each nominee obtained the Capital Markets Board non-objection before taking office as an independent Board member.

Apart from independent Board members, three other members served in the capacity of non- executive Board member at the end of 2024.

The identity, duty and term of office of each Board member are indicated below.

Serves

Name / SURNAME

Duty

Since (1)

Committee Duties

Mehmet Tevfik NANE

Chairperson of the Board

2022

Member, Technology Comm.

(Executive)

Ali İsmail SABANCI

Executive Board Member

2005

Mehmet Cem KOZLU

Non-Executive Board Member

2013

Member, Corp. Gov. Comm.

Hatice Zeynep Bodur OKYAY

Non-Executive Board Member

2016

Member, Risk Comm.

Stephen Mark GRIFFITHS

Non-Executive Board Member

2016

Member, Corp. Gov. Comm.

Agah UĞUR

Independent Board Member

2019

Chair, Audit Comm.

Member, Risk Comm.

David Florenz Alexander

Independent Board Member

2022

Chair, Risk Comm.

VISMANS

Member, Technology Comm.

Ayşegül İLDENİZ

Independent Board Member

2022

Chair, Corp. Gov. Comm.

Member,

Audit

Comm.,

Technology Comm.

Information on the duties assumed elsewhere by our Board members in 2024 is provided in Annex-2 to this Report. Independence statements by our independent Board members are provided in Annex-3 to this Report.

Serves Since

Serves in Position

Name / SURNAME

Duty

(1)

Since (2)

Güliz ÖZTÜRK

Chief Executive Officer

2005

2022

M. Barbaros KUBATOĞLU

Chief Financial Officer

2007

2018

Onur DEDEKÖYLÜ

Chief Commercial Officer

2010

2022

Ergün DEMİRCİ

Chief Operations Officer

2013

2022

Gençer KARATEPE

Chief Flight Operations Officer

2018

2020

Dilara OĞUR

Chief Human Resources Officer

2015

Barış FINDIK

Chief Information Technologies Officer

2017

Murat TÜNAY

Chief Safety & Security Officer

2011

2020

Yavuz Selim ÖZMEN

Chief Flight Academy Officer

2016

2020

Ali UZUN

General Counsel and Sustainability Director

2013

2022

Genel (Public)

Sinan Onur ÖZTUNA

Compliance Monitoring Group Manager

2016

2020

Ayşe Naz ÇAĞIL

Group Head of - Internal Audit & Integrated

2023

Management Systems and Business

Excellence

Our management organization chart is shown below:

General Counsel and Sustainability Director

Board of Directors

Chief Executive Officer

(CEO)

Group Head of -

Internal Audit &

Integrated

Management Systems

& Business Excellence

Chief

Operations

Officer

Chief

Commercial

Officer

Chief Financial

Chief Human

Resources

Officer

Reporting Line

Chief

Information

Technologies

Officer

Chief Safety &

Chief Flight

Emergency

Operations

Academy

Response

Officer

Management

Officer

Additional Reporting Line

Compliance

Monitoring

Group

Manager

G- INFORMATION ON TRANSACTIONS BETWEEN PEGASUS AIRLINES AND BOARD MEMBERS, COMPETING BUSINESS ACTIVITIES OF BOARD MEMBERS AND CONFLICT OF INTEREST REGARDING INVESTMENT ADVICE, RATING AND SIMILAR SERVICES PROCURED BY PEGASUS AIRLINES

At the Annual General Assembly Meeting held on March 28, 2024, our shareholders authorized our Board members, in accordance with Articles 395 and 396 of the Turkish Commercial Code No. 6102, to enter transactions with Pegasus Airlines on their own behalf and on behalf of others and to engage in commercial business falling within the area of activity of Pegasus Airlines.

At the same meeting, our shareholders were informed, under a separate agenda item, as per the provisions of Principle 1.3.6, that in the previous year:

Information on the related party transactions entered into by us in 2024 was provided in Note 5 to the Consolidated Financial Statements for the Accounting Period between January 1 - December 31, 2024, "Related Party Transactions".

Genel (Public)

In 2024, several Board members held executive and non-executive duties in entities that operate in the field of aviation. None of these entities competed with or entered into a significant transaction with us in a manner that would fall within the scope of Principle 1.3.6.

The above transactions and engagements do not create any conflict of interest for us or our subsidiaries.

We act diligently to prevent any conflict of interest with the entities providing us services such as investment advice, corporate governance advice and rating services. In 2024, there are no transactions to report that gave rise to a conflict of interest in this respect.

H- WORKING PRINCIPLES OF THE BOARD OF DIRECTORS AND BOARD COMMITTEES

TheWorking Procedures and Principles of our Board of Directorsare determined in writing and are published on our Investor Relations Website. Subject to the provisions of the mandatory provisions of Turkish law and the Articles of Association regarding the authority, responsibilities, duties of the members of the Board of Directors and the delegation thereof, the Board of Directors:

Our Articles of Association authorize our Board of Directors to resolve on donations on behalf of the Company, within the ceiling to be determined by the General Assembly and subject to the restrictions that may be brought by the Capital Markets Board pursuant to Article 19 of the Capital Markets Law and to resolve on all matters that do not fall within the explicit authority of the General Assembly under the applicable law and the Articles of Association.

In line with the relevant provisions in our Articles of Association, our Board of Directors convenes for meetings and adopts resolutions whenever the Company business requires. However, the Board of Directors meets at least four times a year. Board members are expected to attend all meetings, devote sufficient preparation time ahead of each meeting

Genel (Public)

and present their opinions at each meeting. The Chairperson of the Board is expected to facilitate the efficient participation of all Board members at the meeting.

Records relating to the work of the Board of Directors are kept in writing and available to all Board members. Board members dissenting on any matter discussed during the meeting records his/her reasonable and detailed dissenting opinion in the records.

Save for special quorum requirements of the law, the Board meets at the presence of simple majority of its members and adopts decisions by simple majority of those that are present at the meeting. Each Board member has one vote. Unless one of the Board members requests a meeting, the Board can adopt decisions by the written approval of simple majority of its members to a written proposal submitted by a Board member or by the Company management. Each resolution passed at the Board of Directors is signed by a sufficient number of Board members and are kept in the Resolution Ledger of the Board of Directors.

Based on the resolution of our Board of Directors dated March 28, 2024, Committees and duties were identified as follows.

Audit Committee

Chairperson

Agah UĞUR

Independent Board Member

Member

Ayşegül İLDENİZ

Independent Board Member

Corporate Governance Committee

Chairperson

Ayşegül İLDENİZ

Independent Board Member

Member

Stephen Mark GRIFFITHS

Non-Executive Board Member

Member

Mehmet Cem KOZLU

Non-Executive Board Member

Member

Ömer L. ÖMERBAŞ

Group Head of - Investment Relations

Committee on Early Detection of Risks

Chairperson

David F. A. VISMANS

Independent Board Member

Member

Agah UĞUR

Independent Board Member

Member

H. Zeynep Bodur OKYAY

Non-Executive Board Member

Member

Mustafa TERCAN

Non-Board Member Expert

Technology Committee

Member

Ayşegül İLDENİZ

Independent Board Member

Member

David F. A. VISMANS

Independent Board Member

Member

Mehmet Tevfik NANE

Chairperson of the Board

In determining the composition of the structure of the Board Committees, the Board of Directors aims to form a balanced distribution of work in consideration of the number of non- executive and independent Board Members and the legal requirements for the composition of each Board Committee.

In accordance with the requirements of the Principles, all the members of the Audit Committee and the chairpersons of the Corporate Governance and Risk Committees are appointed from among independent Board members. Executive Board members assume no active duty in these Committees. Our Board did not establish separate Compensation and Nomination Committees, and, in accordance with the Principles, the duties pertaining to such functions are assumed by the Corporate Governance Committee.

The Committees record and maintain all their work in writing and submit regular reports on their work and results of Committee meetings to the Board.

Genel (Public)

Disclaimer

Pegasus Hava Tasimaciligi AS published this content on March 05, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 05, 2025 at 05:20:02.538.