2002 Annual Report - Turkish Airlines

2002 • 87TURKISH AIRLINES INC.NOTES TO THE FINANCIAL STATEMENTS / continued(all figures are restated to TL money values at December 31, 2002 pursuant to IAS 29)d) Land and buildings built on State Airports Administration (DHMI) lands, and their legal structure:The majority of THY’s airport and terminal buildings, repair and maintenance centers, data processing centers, and training facilities are located on theland leased from the State Airports Administration (DHMI). The buildings and facilities on these leased lands have been constructed by THY and arerecorded as fixed assets of the Company. However the land on which all these buildings were built is not registered as THY’s property. The title of theproperty on which all these buildings were built belongs to the Ministry of Finance. However the land was allocated to DHMI for its use and DHMIleased the land to THY and the Company pays rent to DHMI for the land. There were informal claims from DHMI that THY should start paying rent forthe buildings after 10 years from the date of construction. The latest claim was made by DHMI in 1996 for one building and no further claim was madefor other buildings built by THY on this land. The directors believe that they do not need to pay rent for buildings built on DHMI land with THY financing.The authority to resolve this conflict rests with the Ministry of Finance.In the event the dispute is resolved against THY, it may cause THY to pay rent for the airport facilities in the future.e) The Company discounted its retirement pay provision to TL 76,721,751 Million (see note 24) according to IAS 19 (revised). The Company’s totalundiscounted liability for retirement pay would be TL 118,539,547 Million as of December 31, 2002, if all employees had been terminated as at thatdate.28- OPERATING LEASE COMMITMENTSCommitments for future operating leases are as follows:December 31, 2002 December 31, 2001TL 000,000 TL 000,000Aircraft Lease PayableNot later than one year 64,058,392 365,934,163Between 1 & 2 years 219,087,697 304,695,982Between 2 & 5 years 140,632,466 41,594,142Over 5 years - 45,403,083423,778,555 757,627,37029- EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE• As at May 7, 2003 the market price of France Telecom shares which was included in marketable securities as at December 31,2002, has increasedto 19.17 Euro from 17.15 Euro at December 31, 2002. For this reason, the market value of France Telecom shares held by the Company has increasedby TL 808,700 million compared to December 31, 2002.• As at May 7, 2003 the market price of USAfi shares which was included in other financial assets as at December 31,2002, has decreased to TL 12,361from TL 14,020 at December 31, 2002. For this reason, the market value of USAfi shares held by the Company has decreased by TL 949,024 millioncompared to December 31, 2002.• RJ100 aircraft with serial number E3241 that was rented through operational leasing crashed on January 8, 2003 in Diyarbak›r and the number of RJaircrafts in the fleet has decreased from 9 to 8.• On January 14, 2003 a decision was taken for the cancellation of A type-handling license by the Ministry of Transport of the Turkish Republic andfor the return to the Company of the amounts paid to DHMI, in USD and for the annulment of the remaining debt. Therefore the Company cancelledthe expenses of TL 10,544,532 million related to the A type handling license that it had registered for the year 2002 and it recorded on 2002 as otherextra-ordinary income TL 7,761,707 that it had expensed in 2001.• On January 2003 the statutory maximum amount of retirement and severance payable in respect of each year of employment is increased from TL1,260 million to TL 1,324 million.