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Innovation In Action

For Turkish Airlines

Citi's cross-border target balancing optimizes visibility and reduces costs

The Challenge
Each year, Turkish Airlines flies 20 million passengers to 138 cities in 69 countries around the world.

After a period of business growth, cash flow visibility was suffering at the airline's head-office treasury department. The company held 250 bank accounts with 91 banks in 69 countries, and used manual processes to transfer cash between its 107 offices.

Cash reporting relied heavily on phone communication and faxed spreadsheets. But following its stock listing and a company-wide cost-control drive, Turkish Airlines knew it had to improve payment process efficiency and increase visibility through real-time electronic reporting and reducing transaction charges. It issued a tender for its global cash management business.

The Innovation
Citi was awarded the tender on the basis of its matching geographic footprint as well as its combination of global and regional capabilities and expertise. To improve the efficiency of Turkish Airlines' cash flows, Citi began a phased implementation of an innovative, regional cross-border target balancing structure that would sweep the majority of the firm's balances into Citi London.

Since most of Turkish Airlines' sales are euro-denominated, they were centralized in the first phase, with euro balances swept automatically from Citi or third-party accounts. In the second phase, selected additional currencies, including U.S. dollars, were introduced to the structure. The third phase saw rationalization of currency balances that could not participate for legal or other practical reasons.

In addition to implementing the CitiDirect® online baking system to eliminate manual payment initiation, Turkish Airlines became the first Turkish customer to install Citi's transaction flow analysis tool, TreasuryVision(r), which provides real-time balance information on accounts across the world in customized formats.

At the client's request, the new structure is supported 24/7 by an Istanbul-based customer service team that coordinates with staff across Citi's global branch network.

The Result
Turkish Airlines has streamlined its account structure, reduced banking costs, eliminated manual payment processes, and significantly enhanced visibility and control over its cash flows. Even balances in currencies that remained outside Citi's structure have achieved improved investment rates.