Turkish aviation stocks rallied after months of lagging the country’s main equity gauge, yet the respite may prove short lived.

Companies including the national carrier Turkish Airlines and low-cost airline Pegasus are poised to cap the biggest two-day gains since at least 2014, according to data compiled by Bloomberg. The increases follow data that showed a drop in international passengers in July was smaller than a month earlier, even after a deadly attempted coup on July 15.

“This may have led people to start asking whether the worst is over, but I recommend caution,” said Selim Kunter, an analyst at Istanbul-based Deniz Invest, who has a hold recommendation on both airlines’ shares. “It may be too early to drive such a big conclusion from only one month of data given the sour prospects of second-quarter profit.”

A series of terror attacks has rocked the country in the past year prompting foreign tourist arrivals to drop for eleven months in a row, the longest streak on record. Turkish Airlines and Pegasus are expected to report another quarter of loss when they announce their earnings next week. Airport operator TAV Holding said July 27 that its net income plunged 67 percent in the second quarter.

Pegasus Hava Tasimaciligi AS climbed 9.9 percent to 13.02 liras as of 1:44 p.m. local time, poised for the biggest gain on the record. Turk Hava Yollari Anonim Ortakligi, or Turkish Airlines, rose 6.2 percent to 5.80 liras. TAV Havalimanlari Holding and ground handling company Celebi Hava Servisi advanced 5.7 percent and 4 percent, respectively.

Even with the gains, all four companies have retreated more than 20 percent year to date, compared with a 9.3 percent advance in the Borsa Istanbul 100 Index.

Passenger Drop

The number of international passengers traveling through Turkish airports fell 26 percent in July from a year earlier, compared with a 29 percent decline in June, according to data from State Airports Authority DHMI.

Terrorist attacks and the failed coup, “resulting in a crackdown by the government on those suspected of sympathizing with its organizers, has added significantly to concerns about personal security for foreigners as well as Turks, especially those living abroad,” Alexander Kazbegi, an analyst at Renaissance Capital Ltd., said in an e-mailed note Aug. 4. “Unless these conditions change we don’t see travel picking up in months to come.”

Kazbegi placed shares of Turkish Airlines and Pegasus under review on expectation of “significant changes in the companies’ business plans” after second-quarter results.

This article was written by Tugce Ozsoy from Bloomberg and was legally licensed through the NewsCred publisher network.

Photo Credit: A Turkish Airlines jet takes off at Boston's Logan International Airport. Turkish Airlines and low-cost airline Pegasus are poised to cap the biggest two-day gains since at least 2014. David Montiverdi / Flickr