2025 Annual Activity Report

Genel (Public)

DRT Bağımsız Denetim ve

Serbest Muhasebeci Mali Müşavirlik A.Ş. Maslak No1 Plaza

Eski Büyükdere Caddesi Maslak Mahallesi No:1 Maslak, Sarıyer 34485 İstanbul, Türkiye

Tel: +90 (212) 366 60 00

Fax: +90 (212) 366 60 10

https://www.deloitte.com.tr

Mersis No :0291001097600016

Ticari Sicil No: 304099

(CONVENIENCE TRANSLATION OF

INDEPENDENT AUDITOR'S REPORT ON THE MANAGEMENT'S ANNUAL REPORT

ORIGINALLY ISSUED IN TURKISH)

INDEPENDENT AUDITOR'S REPORT ON THE MANAGEMENT'S ANNUAL REPORT

To the General Assembly of Pegasus Hava Taşımacılığı Anonim Şirketi

1. Opinion

   As we have audited the full set consolidated financial statements of Pegasus Hava Taşımacılığı A.Ş. ("the Company") and its subsidiaries ("the Group") for the period between 01/01/2025-31/12/2025, we have also audited the annual report for the same period.

   In our opinion, the consolidated financial information provided in the Management's annual report and the Management's discussions on the Group's financial performance, are fairly presented in all material respects, and are consistent with the full set audited consolidated financial statements and the information obtained from our audit.

2. Basis for Opinion

   We conducted our audit in accordance with the Standards on Independent Auditing ("SIA") which is a part of Turkish Auditing Standards accepted by regulations of the Capital Markets Board and published by the Public Oversight Accounting and Auditing Standards Authority ("POA"). Our responsibility is disclosed under Responsibilities of the Independent Auditor on the Independent Audit of the Annual Report in detail. We are independent of the Company in accordance with the Code of Ethics for Independent Auditors (including Independence Standards) ("Code of Ethics") published by the POA, as applicable to audits of financial statements of public interest entities, together with the ethical requirements included in the regulations of the Capital Markets Board and other regulations that are relevant to audits of the financial statements of public interest entities. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

3. Auditor's Opinion for the Full Set Consolidated Financial Statements

   We have presented unqualified opinion for the Group's full set consolidated financial statements for the

   period between 01/01/2025-31/12/2025 in our Auditor's Report dated 4 March 2026.

   Deloitte, Deloitte Touche Tohmatsu Limited ("DTTL"), onun küresel üye firma ağı ve ilgili kuruluşlarından bir veya daha fazlasını ifade eder. DTTL üye firmalarının her biri yasal olarak ayrı ve bağımsız kuruluşlardır. DTTL müşterilere hizmet sunmamaktadır. Daha fazla bilgi almak için https://www.deloitte.com/about adresini ziyaret ediniz.

   © 2026. Daha fazla bilgi için Deloitte Türkiye (Deloitte Touche Tohmatsu Limited üye şirketi) ile iletişime geçiniz.

   
   
   

4. Other Matters

   The Management's annual report of the Group for the year ended 31 December 2024 was audited by another audit firm who expressed an unmodified opinion on the annual report on 4 March 2025.

5. Management's Responsibility for the Annual Report

   The Group's Management is responsible for the following in accordance with Article 514 and 516 of the Turkish Commercial Code No. 6102 ("TCC") and "Communiqué on Principles of Financial Reporting in Capital Markets" with No.14.1 of the Capital Markets Board ("the Communiqué"):

   1. Preparing the annual report within the three months following the reporting date and presenting it to the General Assembly,

   2. Preparing the annual report with the all respects of the Group's flow of operations for that year and the Group's consolidated financial performance accurately, completely, directly and fairly. In this report, the consolidated financial position is assessed in accordance with the consolidated financial statements. The Group's development and risks that the Group may probably face are also pointed out in this report. The Board of Director's evaluation on those matters are also stated in this report.

   3. The annual report also includes the matters stated below:

      • The significant events occurred in the Group's activities subsequent to the financial year ends,

      • The Group's research and development activities,

      • The compensation paid to key management personnel and members of Board of Directors including financial benefits such as salaries, bonuses and premiums, allowances, travelling, accommodation and representation expenses, in cash and kind facilities, insurances and other similar guarantees.

        The Board of Directors also considers the secondary regulations prepared by the Ministry of Trade and related institutions while preparing the annual report.

        
        
        

6. Responsibilities of the Independent Auditor on the Independent Audit of the Annual Report

Our aim is to express an opinion and prepare a report about whether the Management's discussions and consolidated financial information in the annual report within the scope of the provisions of the TCC and the Communiqué are fairly presented and consistent with the information obtained from our audit.

We conducted our audit in accordance with the regulations of the Capital Markets Board and the SIA. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Management's discussions on the Group's financial performance, are fairly presented in all material respects, and are consistent with the full set audited consolidated financial statements and the information obtained from our audit.

The engagement partner on the audit resulting in this independent auditor's report is Cem Tovil.

DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED

Cem Tovil Partner

Istanbul, 4 March 2026

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:

• "Company" or "Pegasus Airlines" refers to Pegasus Hava Taşımacılığı A.Ş., more fully

  described in Section 1/A of this Report.

• "Board" or "Board of Directors" refers to the Pegasus Airlines Board of Directors.

• "Esas Holding" or "Esas" refers to Esas Holding A.Ş.

• "Hitit CS" refers to Hitit Bilgisayar Hizmetleri A.Ş.

• "Pegasus Innovation Lab" refers to Pegasus Innovation Lab, Inc.

• "Pegasus Aviation Technologies" refers to Pegasus Havacılık Teknolojileri ve Ticaret A.Ş.

• "Pegasus Airlines Ventures" refers to Pegasus Airlines Ventures Limited Partnership

• "Pegasus Europe" refers to Pegasus Europe Besloten Vennootschap

• "Principles" refers to the Corporate Governance Principles published by the Turkish Capital

  Markets Board.

• "Report" refers to this Annual Report of the Pegasus Airlines Board of Directors.

1. GENERAL INFORMATION

   A- GENERAL INFORMATION ON PEGASUS AIRLINES

   Reporting Period : January 1, 2025 - December 31, 2025 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. https://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-cost carrier 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.

   Our annual budget is approved by our Board of Directors before each fiscal year.

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   Our operational and financial results are monitored by the Board of Directors on a regular basis, against budgeted targets. Our Board of Directors reviews our strategic targets and the Company's progress in terms of strategic key performance indicators on a regular basis. Each year, our Board of Directors also carries out its oversight on strategically important domains including technology and Artificial Intelligence, Human Resource management and succession planning, sustainability and climate change adaptation, and corporate governance.

   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 our 2025 TSRS Compliant Sustainability Report.

   
   
   C- CAPITAL, SHAREHOLDING AND ORGANIZATION STRUCTURE OF PEGASUS AIRLINES

   Our issued capital is ₺500,000,000 and our authorized capital ceiling is ₺2,500,000,000. Information on our capital and shareholding structure as of January 1, 2025, and December 31, 2025, respectively, is shown in the table below.

   January 1, 2025 December 31, 2025

   Shareholder	Number of Shares	Shareholding Ratio	Number of Shares	Shareholding Ratio
   Esas Holding	264,056,018	52.81%	264,056,018	52.81%
   Publicly Traded	226,866,830	45.37%	226,866,830	45.37%
   Emine KAMIŞLI	3,025,717	0.61%	3,025,717	0.61%
   Ali İsmail SABANCI	3,025,717	0.61%	3,025,717	0.61%
   Kazım KÖSEOĞLU	1,512,859	0.30%	1,512,859	0.30%
   Can KÖSEOĞLU	1,512,859	0.30%	1,512,859	0.30%
   Total	500,000,00	100.00%	500,000,00	100.00%

   As of December 31, 2025, 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 offices in Istanbul and London, Esas invests in various asset classes globally including private equity, real estate, venture capital and public markets.

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   Our Company's management organization chart as of December 31, 2025, 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 17% CAGR in number of passengers in the 2022-2025 period, outpacing the 11% CAGR realized in the total Turkish market. We operate a growing young and modern fleet of 127 aircraft with 5.13 average aircraft age as of December 31, 2025.

   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, 2025, we offered scheduled passenger services on 39 domestic routes in Türkiye and 119 international routes to European (including North Cyprus), CIS, Middle Eastern and African destinations, serving a flight network covering 158 destinations in 55 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 2025, our CASK, non-fuel was recorded as €c2.68, while revenue recorded from ancillary services constituted 37% 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 1% 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 €c2.06 and an EBITDA margin of 33.3%. We repeated our performance in the post-COVID era, from 2022 to 2025 (CASK non-fuel - 2022: €c2.18, 2023: €c2.26, 2024: €c2.55 2025: €c2.68. EBITDA margin - 2022: 34.1%, 2023: 31.4%, 2024:

   28.4%, 2025: 24.6%).

   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.

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   F- INFORMATION ON THE MANAGEMENT BODY, SENIOR MANAGEMENT AND PEGASUS AIRLINES EMPLOYEES
   1. Management Body: Our management body is the Board of Directors. Within the framework of Article 10 of our Articles of Association, the Board of Directors must be composed of at least five members. Also, pursuant to the Principles, one third of the members of the Board must fulfill the independence criteria determined by the Turkish Capital Markets Board.

      Three independent members served in our Board of Directors in 2025. They were appointed at the General Assembly Meeting in Marh 28, 2025. 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 2025.

      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.

      (1) Board appointments are made annually at the discretion of our shareholders and our current Board members were appointed for a term of one year at the Annual General Assembly Meeting dated March 28, 2025.

      Information on the duties assumed elsewhere by our Board members in 2025 is provided in Annex-2 to this Report. Independence statements by our independent Board members are provided in Annex-3 to this Report.

   2. Senior Management: Our senior management comprises the General Manager (CEO) and department heads directly reporting to the CEO. Information on Pegasus senior management and their duties as of December 31, 2025, is provided in the following chart.

      Name / SURNAME Duty

      Serves Since

      (1)

      Serves in Position 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	2015
      Barış FINDIK	Chief Information Technologies Officer	2017	2017
      Murat TÜNAY	Chief Safety & Security Officer	2011	2020
      Yavuz Selim ÖZMEN	Chief Flight Academy Officer	2016	2020
      Ali UZUN	General Counsel and Sustainability Senior Director	2013	2022

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      Sinan Onur ÖZTUNA	Compliance Monitoring Group Manager	2016	2020
      Ayşe Naz ÇAĞIL	Group Head of - Internal Audit & Integrated	2023	2023

      Management Systems and Business Excellence

      (1) Indicates service in Pegasus Airlines Group Companies.

      (2) Indicates service in the stated duty.

      Compliance Monitoring Group Manager

Chief Information Technologies Officer

Our management organization chart is shown below:

Reporting Line Additional Reporting Line

1. Number of Employees: The total number of our full-time employees, including the employees of our consolidated subsidiary defined in Section 4/D of this Report, as of December 31, 2025, was 9,255. This number includes the members of our senior management listed above. There are no employees under a collective bargaining agreement. 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, 2025, 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:

   • no material transactions realized between Pegasus Airlines or its subsidiaries on one hand and our controlling shareholders, Board members, members of our senior management with administrative responsibility or their spouses or relatives up to and including the second degree on the other hand, which would create a conflict of interest, or

   • any other instance where any of the foregoing persons engaged in competing business on their own account or on the account of others or through any enterprise where they act as a shareholder with unlimited liability.

     Information on the related party transactions entered into by us in 2025 was provided in Note 5 to the Consolidated Financial Statements for the Accounting Period between January 1 -December 31, 2025, "Related Party Transactions".

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     In 2025, 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.

   • Our chairperson of the Board of Directors Mehmet T. NANE served as a non - executive board member of Flybondi Limited (United Kingdom), investing in the first low - cost airline based in Argentina.

   • Stephen M. GRIFFITHS served as managing director at East Midlands Airport and Group Operational Transformation Director, as part of the Manchester Airports Group (United Kingdom) in 2025.

   • Our non-executive Board member M. Cem KOZLU served as a member of the supervisory board and the audit committee of DO & CO AG (Austria).

     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 with services such as investment advice, corporate governance advice and rating services. In 2025, 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

     The Working Procedures and Principles of our Board of Directors are 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:

   • provides entrepreneurial leadership of the Company by taking decisions and guiding and overseeing the Company management, maintaining its risk, growth and income balance at the most appropriate level and by giving priority to the long-term interests of Pegasus Airlines with a diligent risk-management approach;

   • guides corporate strategy, determines the human and financial resources required by Pegasus Airlines and approves the Company's annual budget, and while preventing conflicts of interest and balancing competing demands on Pegasus Airlines, supervises the performance of Pegasus Airlines and its management; and

   • supervises the compliance of Pegasus Airlines' operations with the applicable legislation, the Articles of Association, the internal regulations, and corporate policies.

   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.

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   Board members are expected to attend all meetings, devote sufficient preparation time ahead of each meeting 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, 2025, Committees and duties were identified as follows.

   	Audit Committee Chairperson Member	Agah UĞUR Ayşegül İLDENİZ	Independent Board Member Independent Board Member
   	Corporate Governance Committee
   	Chairperson	Ayşegül İLDENİZ	Independent Board Member
   	Member Member	Stephen Mark GRIFFITHS Mehmet Cem KOZLU	Non-Executive Board Member Non-Executive Board Member
   	Member	Ömer L. ÖMERBAŞ	Group Head of - Investment Relations
   	Committee on Early Detection of Risks
   	Chairperson Member	David F. A. VISMANS Agah UĞUR	Independent Board Member 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.

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   Summary of the work undertaken by the Board Committees is provided below.

   Audit Committee

   The Audit Committee held four meetings on March 3, May 5, August 11, and November 7, 2025. The Committee engaged in works within the framework of its Charter and in this respect reviewed our Company's financial reports for the periods ending on December 31, 2024, and on March 31, June 30, and September 30, 2025, and shared its favorable opinion with the Board. The Committee prepared the proposal for the appointment of the independent audit firm for 2025 audit requirements, oversaw the activities of the Company's Internal Audit Department, its work plan and budget. In 2025, the Committee continued to oversee ethics governance work. The Committee also oversaw the independent assurance review process regarding the 2024 Turkish Sustainability Reporting Standards (TSRS) Compliant Sustainability Report published in 2025. The Committee informed the Board of its activities at each Board meeting held in 2025.

   Corporate Governance Committee

   The Corporate Governance Committee held four meetings on March 19, May 26, September 17, and December 17, 2025. The Committee engaged in works within the framework of its Charter and in this respect oversaw corporate governance compliance, the nomination of independent directors and the determination of nomination and compensation principles for Board members in 2025, succession planning for executive management and key positions, scrutinized the operations of the Investor Relations Department. In 2025, the Committee reviewed the Company's Sustainability/ESG actions on a regular basis. The Corporate Governance Committee also conducted a new Board Self Evaluation Study in 2025. Pegasus Airlines increased its Corporate Governance Compliance Rating to 98.2%, which marked the highest rating score in the BIST Corporate Governance Index as of December 31, 2025. The Committee informed the Board of its activities at each Board meeting held in 2025.

   Committee on Early Detection of Risks

   The Committee on the Early Detection of Risks held four meetings on March 14, May 23, September 15, and December 16, 2025. The Committee engaged in works within the framework of its Charter and in this respect established the main principles and control mechanisms for the determination and management of main risks on commercial, operational, financial, legal, IT, HR and sustainability, that may endanger the existence, development and future of the Company and oversaw the implementation of such principles and mechanisms. The Committee conducted its annual review of Safety Emergency Response and IT Business Continuity actions in 2025. The Committee informed the Board of its activities at each Board meeting held in 2025. The Committee also provided information on its work and its periodic evaluation of risks once every two months in accordance with the provisions of Article 378 of the Turkish Commercial Code.

   Technology Committee

   The Technology Committee held two meetings on May 20 and December 2, 2025. The Committee engaged in works within the framework of its Charter and in this respect, evaluated technological and digital innovation initiatives within the Company, focusing particularly on cybersecurity and digitalization in operations.

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   The overall attendance rate for Board and Committee meetings was 100% in 2025. A breakdown of individual attendance is provided below:

   Attendance

   Board / Committee Member	Audit Comm.	Corp. Gov. Comm.	Risk Comm.	Technology Comm.	Board of Directors
   Mehmet Tevfik NANE	-	-	-	2/2 (100%)	4/4 (100%)
   Ali İsmail SABANCI	-	-	-	-	4/4 (100%)
   Mehmet Cem KOZLU	-	4/4 (100%)	-	-	4/4 (100%)
   Hatice Zeynep Bodur OKYAY	-	-	4/4 (100%)	-	4/4 (100%)
   Stephen Mark GRIFFITHS	-	4/4 (100%)	-	-	4/4 (100%)
   Agah UĞUR	4/4 (100%)	-	4/4 (100%)	-	4/4 (100%)
   David F. A. VISMANS	-	-	4/4 (100%)	2/2 (100%)	4/4 (100%)
   Ayşegül İLDENİZ	4/4 (100%)	4/4 (100%)	-	2/2 (100%)	4/4 (100%)
   Mustafa TERCAN	-	-	4/4 (100%)	-	-
   Ömer Lütfü ÖMERBAŞ	-	4/4 (100%)	-	-	-
   TOTAL	100%	100%	100%	100%	100%

   We run an effective mechanism to identify and follow-up on the completion of action items decided by the Board of Directors or by Board Committees. All action items raised for 2025 were completed by the end of 2025. There are no material overdue action items as of December 31, 2025.

   1. INFORMATION ON THE EFFICIENT EXERCISE OF SHAREHOLDER RIGHTS

      Pegasus Airlines Investor Relations is responsible for managing shareholder relations and reports to the Company CFO. Corporate Secretary works in collaboration with Pegasus Airlines Investor Relations on all corporate governance matters. Our senior management staff responsible for shareholder relations and their contact information are provided below:

      Mr. M. Barbaros KUBATOĞLU

      Chief Financial Officer

      Mr. Ömer L. ÖMERBAŞ

      Group Head of Investor Relations

      Telephone : +90 216 560 7542

      Fax : +90 216 560 8087

      E-mail : pegasusyatirimciiliskileri@flypgs.com Website : http://www.pegasusinvestorrelations.com/

      In accordance with the requirements of the Capital Markets Board's Corporate Governance Communiqué No. II-17.1, Ömer L. ÖMERBAŞ is the Group Head of Investment Relations unit and serves as a member of our Corporate Governance Committee. Ömer L. ÖMERBAŞ is a full-time employee reporting to the CFO. He holds Capital Markets-Level 3 and Corporate Governance Rating Licenses. As the head of Pegasus Airlines Investment Relations, he carries out all investor relations activities under the scrutiny of the Committee. Pegasus Airlines investor relations strategy, key targets, activities, performance results are regularly reported to the Committee and the Board of Directors. In 2025, the regular updates were reported to the Board and the Committee on March 19-20, May 26-27, September 17-18, and December 17-18.

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      Throughout 2025, we responded to inquiries submitted by our shareholders without discrimination, through telephone, e-mails or meetings and attended tentargeted investor events.

      Information on the principles, methods and frequency of communication of information to our shareholders is detailed in the Pegasus Information Policy available on our Investor Relations Website.

      We undertake to act in honest, respectful, fair, and trustful behavior based on reason, conscience, and common sense with all stakeholders. In this respect, we aim to establish sustainable, efficient, and transparent communication with stakeholders and to enable stakeholders to achieve correct and complete information on time, in equal terms and in a way that is comprehensible, interpretable, and easily accessible at low cost. Pegasus Investor Relations Website forms the principal communication platform for investor communication.

      Also, information we are required to make available as per the "Information Society Services" related provisions of the Turkish Commercial Code No. 6102, is published on the e-COMPANY platform of the Central Registry Agency accessible by a link on our Investor Relations Website (https://e-sirket.mkk.com.tr/esir/Dashboard.jsp#/sirketbilgileri/11366).

      The inquiries received by the Investor Relations Unit were answered within the framework of the law and the Pegasus Information Policy.

      No requests for special audit of a specific matter were submitted to Pegasus in 2025. Our shareholders are entitled by law to request the appointment of a special auditor to review specific matters, and this statutory right is explicitly recognized in Article 16 of our Articles of Association.

      In accordance with the provisions of Article 137 paragraph 3 of the Capital Markets Law No. 6362, our Articles of Association do not contain any restrictions with respect to the transfer of Company shares that are traded on Borsa Istanbul. Article 7 of our Articles of Association grants our Board of Directors the right not to approve the transfer of Company shares in specific circumstances and for the purpose of our Company's ability to resume its operations within the framework of the Turkish Civil Aviation Law No. 2920. Such authority of the Board of Directors will only become exercisable to the extent at least 50% of Pegasus shares are held by non-Turkish citizens.

      J- INFORMATION ON SHAREHOLDER MEETINGS HELD IN THE REPORTING PERIOD

      The Annual General Assembly meeting of our Company for the year 2024 was held on March 28, 2025, at 10:00 am local time at our Company Headquarters in Istanbul.

      The meeting invitation and the agenda were published in the Trade Registry Gazette dated March 3, 2025, and numbered 11283, on page 569, on our Investor Relations Website, on the Public Disclosure Platform and the Electronic General Assembly Portal within the time limits prescribed by the law. Written invitations were also communicated to the shareholders that are not subject to the exception set out in Article 29 Paragraph 2 of the Capital Markets Law No. 6362.

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      Shareholders representing ₺308,788,083.760 (61.76% of the Company capital) were represented at the meeting, thereby constituting the requisite meeting quorum. Mr. Mehmet

      T. NANE, Chairperson of the Board of Directors, Ms. Güliz ÖZTÜRK, CEO, Mr. M. Barbaros KUBATOĞLU, CFO, responsible for financial reporting, and Mr. Kaan BİRDAL representing the Company's independent auditor, Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi, attended the meeting in person.

      The decisions of our shareholders adopted at the Annual General Assembly meeting held on March 28, 2025, are indicated in the table below:

      March 28, 2025 Annual General Assembly Resolutions Vote

      • Approval of the Annual Activity Report, the Auditor Report, and the Financial Statements for the year 2024

      • Release of the members of the Board of Directors for operations and accounts pertaining to the year 2024

        Majority

        Majority

      • Determination of no distributable profit for the year 2024 Majority

      • Approval of amendments to Article 6 of the Company Articles of Association regarding the increase in the Authorized Capital Ceiling and the renewed Authorized Capital Ceiling Term

        Majority

      • Appointment of the members of the Board of Directors for a term of one year Majority

      • Determination of payments to be made to Board members during the term of appointment

      • Authorization of the members of the Board of Directors for transactions falling within the scope of Articles 395 and 396 of the Turkish Commercial Code

      • Appointment of DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (Deloitte Türkiye)as the independent audit firm for the year 2025 as per the provisions of Article 399 of the Turkish Commercial Code

        Majority Majority Majority

      • Determination of a ceiling for donations to be made by the Company in 2025 Majority

The agenda, list of attendees and meeting minutes at the meeting are published on our Investor Relations website.

There were no transactions to report in 2025 that had to be submitted for the approval of our shareholders, where the approval of the majority of the independent Board members was required and not received with respect to a resolution of the Board of Directors.

Article 6 of the Company Articles of Association was amended effectively as of April 28, 2025, to increase the Company's authorized capital ceiling of TRY 500,000,000 valid for 2023-2027 to TRY 2,500,000,000 to cover the period between 2025-2029.

There was no policy amendments proposed or adopted by the Board of Directors or the General Assembly in the reporting period.

1. FINANCIAL BENEFITS PROVIDED TO BOARD MEMBERS AND SENIOR MANAGEMENT

   Pursuant to our Articles of Association, Board members are paid a monthly or annual salary or meeting-based remuneration to be determined by the General Assembly. Principles relating to the compensation of Directors are set out in the Pegasus Airlines Compensation and Indemnification Policy.

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   With respect to the remuneration of independent Board members, stock options or payment plans based on the Company's performance cannot be used. Nevertheless, remuneration of independent Board members should be at a sufficient level to protect their independence.

   The criteria and procedures relating to the compensation of Board members and proposals for the remuneration of and other benefits to be provided to them are annually determined by the Corporate Governance Committee and submitted for the evaluation of our shareholders at the Annual General Assembly Meeting. In this respect, "2025 Nomination and Compensation Principles and Criteria for Pegasus Board of Directors" was determined by the decision of the Corporate Governance Committee, which was published as Annex-4 to the Information Document prepared for the Annual General Assembly meeting held on March 28, 2025 and communicated to our investors through our Investor Relations Website, the Public Disclosure Platform and the Electronic General Assembly Portal.

   The cumulative ceiling for payments to be made to our Board members for their Board duties and the annual payments made for their duty as chairperson or member in the Board Committees, and the main principles applicable to such payments, were determined by the shareholders at the Annual General Assembly meeting held on March 28, 2025 and was published in the meeting minutes.

   Total financial benefits provided to Board Members and Senior Management in 2025 amounted to ₺637,228,159. This amount includes the gross fees paid to the members of our Board of Directors regarding their Board duties as well as gross payments for their duties as chairperson or member at the relevant Board committees, the total salary and bonus fees paid to the CEO and other C-level executives, and the income tax and social security contributions with respect to the same persons.

   In 2025, there were no loans or security extended by Pegasus to the members of the Board or senior management.

2. RESEARCH AND DEVELOPMENT ACTIVITIES

   We are dedicated to allocating resources for in-house aviation technology developments and research & development activities.

   The activities carried out by the Performance and Navigation Department, as part of our Flight Operations Department, in 2025 have been grouped under the headings of effective operational monitoring and communication, flight performance and safety, and cost control.

   A new application called EFB (Electronic Flight Bag) Lite, which is a different version of the EFB Mobile previously provided to our cockpit crews, was developed and made available by the end of the year for use by cabin crew, technical staff, and ground handling personnel. EFB Lite was developed to provide instant support, enable effective intervention in disruptions, support on-time departures, and reduce operational costs through timely access to accurate information in operational processes and fast digital communication. The application, which was specifically designed in line with the needs of cabin crews, operational staff, and technicians, has been developed to run on iOS and Android compatible mobile devices. Operational units can live track the flights assigned to them with all necessary technical information and documentation via this application and can also communicate with their teams through the same platform.

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   An In-Flight Performance module has been added to EFB tablets as a new analysis module. This module enables fast and accurate calculation of flight performance during climb, descent, and holding phases. With this application, pilots can evaluate optimum level selection and step climb / step descent options, thereby ensuring effective fuel management during the in-flight phase.

   Within the scope of EASA's (European Union Aviation Safety Agency) updated Low Visibility Operations regulation, a development was implemented in the EFB database for airport suitability assessments and was integrated with aircraft EFBs. In addition, through further enhancements made on aircraft EFBs, data obtained from low visibility operations can be monitored and reported, enabling the necessary crew, aircraft, and airport evaluations for such operations. This development makes a significant contribution to flight safety.

   Also, within the scope of flight safety, an infrastructure enhancement was implemented on aircraft EFBs for evaluating the suitability of alternate airports that may be used along the routes specified in flight plans. In summary, selected Adequate Airports, determined by considering the range an aircraft can fly under certain conditions and rules, can now be tracked and displayed on the EFB.

   For the Cost Control Department, fuel invoice validation processes were improved by enabling direct access to fuel receipts for the relevant flights through a development made on the Mobile EFB. With this application, as soon as the pilot receives the fuel receipt, they can capture an image of the receipt with a single button via the Mobile EFB and send it to the relevant reporting and cost control systems.

   In 2025, we repositioned our technology and digitalization efforts with the aim of transforming our technology vision into a scalable and sustainable operating model. Our focus was to deepen these capabilities through a data- and AI-driven decision support layer, and to turn technology into a strategic lever that delivers tangible and measurable value across revenue, cost, operations, and safety-rather than serving solely as a tool to enhance user experience.

   In line with this approach, we adopted a model that digitalizes processes end-to-end, reduces manual steps, enables real-time visibility, and strengthens a data-driven decision-making culture across the organization. We carried out integration-, automation-, and optimization-focused initiatives across a wide scope-from passenger touchpoints to operational planning, and from financial processes to maintenance and technical operations.

   At the same time, we matured our governance mechanisms to ensure the safe, ethical, and auditable use of Artificial Intelligence (AI) at enterprise scale. 2025 was a year in which technology became a holistic transformation enabler across the Company-creating strategic value and measurable impact.

   Key innovations in Technology and Innovation are summarized below:

   • Through the Financial Segmentation project, we created a hybrid financial segmentation classification by analyzing-via an AI-supported model-the purchase frequency of tickets and ancillary services, average basket value, and historical payment trends within the last three years. We supported the financial segment output with additional enhancements that would improve passenger experience and reduce friction in payments; we reduced the friction rate by approximately 40% and increased the payment success rate by 4%.

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     In line with our passenger-centric approach, the financial segment data that we developed with up-to-date technologies and made easily accessible played a critical role as a scalable decision support layer in our company's technological and operational processes.

   • The Paystation project aimed to enable passengers to experience fast and reliable payment at every payment point within the station, such as Sales Offices, Check-in Counters, and Boarding Gates. We designed and deployed on-site the new processes integrated into our operations at the Istanbul Sabiha Gökçen Airport by considering terminal staff usage habits and the operational intensity of the sales area. In addition to facilitating staff work, we aimed to contribute positively to reconciliation processes by offering different exchange rate options, systematizing cash payments, preventing documentation weaknesses, and creating accounting records.

   • With the Auto Fare development program we launched, we delivered a significant improvement in the fare structure; we eliminated the need for manual calculation by enabling the system to automatically calculate the base fare and all fare components over the total fare. We strengthened revenue protection and control over pricing strategies through enhancements for ticket change (reissue) and automatic fee transfer to GDS channels. This holistic structure delivered sustainable and measurable value to our company in terms of revenue management and pricing capability.

   • In line with IATA's modern airline retailing approach, we migrated to version 24.1 on the OOMS NDC infrastructure, which makes it possible to manage flights and ancillary services under a single order by decoupling airlines from traditional legacy messages; we enabled integration with online travel agencies and prepared the fast-track product sales infrastructure via NDC. At the same time, with this transition, we paved the way for reducing GDS costs by managing GDSs through NDC messages.

   • To enhance our passengers' digital experience, we developed the Live Activity feature-previously built for iOS devices in our mobile app - for our Android users as well. This enabled Android users to view real-time flight information, departure time, gate number, gate changes, delays, terminal information, boarding notifications, and baggage details from the lock screen starting 3 hours before their flight. With Live Activity, our passengers accessed critical updates instantly throughout their journey and experienced a seamless and smooth journey.

   • To support our passengers with accurate and timely information throughout their journey, we launched the Timeline feature so they can track the sequential steps and statuses they will follow on a timeline. With this feature, we reduced potential uncertainties throughout the process and ensured accurate and timely updates at all stages-from pre-flight to post-flight completion.

   • In parallel with developments in AI in shopping and search, we went live with the infrastructure that enables Pegasus to communicate directly via Large Language Models and allows our users to reach Pegasus through this channel as well. In this way, we took an initial important step toward future readiness by making our infrastructure ready for the representation of the shopping experience on Large Language Models, which we expect to begin in the near future.

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   • We implemented improvements in customer service processes with a focus on digitalization and automation. By developing AI-supported digital assistant and customer support solutions, we ensured that passengers received faster and more effective support across different touchpoints. We strengthened live agent processes and increased service quality and accessibility.

   • We restructured passenger communication processes on a next-generation communication infrastructure to provide more consistent and timely updates. We implemented informative and experience-supporting digital communications for different passenger segments based on operational needs. Within this scope, we applied content that enriches passenger experience and special communication scenarios.

   • We updated the technological infrastructure used in marketing and campaign processes and built a data-driven and automation-supported structure. By improving existing analytical models, we enabled campaign and communication processes to be managed more effectively and at scale.

   • We implement an Image Recognition-based digital solution for onboard sales and catering count processes. We perform the count of loaded catering items automatically via captured photos. Through this transformation, we reduced teams' operational workload; we digitalized counting and reconciliation processes end-to-end; and we increased process speed and data accuracy.

   • We carried out infrastructure work to support baggage management processes end-to-end and increase traceability. While enabling baggage tracking via handheld terminals on the ramp, we also ensured system compatibility with the Apple AirTag location-sharing infrastructure. This allowed our passengers with an AirTag in their baggage to share the device's location information with operational teams; by shortening resolution time in lost/delayed baggage cases, we increased operational efficiency and passenger satisfaction.

   • To provide our passengers with accurate, timely, and complete information, we continued efforts to ensure centralized and consistent provision of operational data for the airports we operate. Within this scope, we prepared the technical infrastructure required to obtain gate information assigned to flights at 36 outstations systemically, creating a critical data source for passenger information and operational visibility.

   • In parallel with digitalization efforts in passenger operations, we also took significant steps within the scope of regulatory compliance. In this context, we rolled out across all check-in channels the system that enables identity verification for Turkish citizens during the check-in process.

   • We strengthened our flight monitoring capabilities for real-time tracking and management of flight operations. By consolidating operational data from different sources on a single platform, we provided more holistic and real-time visibility into flights. Thanks to the early warning mechanisms we established, we were able to take proactive actions. Through this approach, we increased decision-making speed and operational efficiency.

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   • In line with our growing number of flights and crew, we started planning and enabling our flight crews' annual leave requests through optimization. We tracked the process with an optimization tool; we managed the process easily by considering operational and crew needs so that existing annual leave balances could also be utilized.

   • We reviewed the shuttle and taxi processes used by our flight crews to reach their duties or homes, considering the needs of both operations and our crews. We designed a digital and traceable process that moves away from manual work and prevents unnecessary usage.

   • We designed a chat module to make real-time and easy communication between our flight crews and our Crew Assignment department on the day of operation, and we supported synchronized communication. In addition, with the Request Management system, we enabled them to submit requests outside the day of operation through the system, and enabled relevant departments to manage those requests.

   • By adding new features to our crew planning systems, we continued to make them more compatible with our planning and optimization processes. We enabled our GENDEC (General Declaration) reports to be generated automatically by the system and sent to relevant airports via digital channels. Thus, we made the process end-to-end digital, fast, and error-free.

   • We continued to add new features to the mobile applications used by our flight crews. To contribute to flight safety, we improved the potential risk prediction process in our pilots' flights and shared more detailed information with relevant teams. Within the scope of easy tracking and assignment of individuals who are fit to fly when operational needs arise, we added a function to report fitness-for-duty status. We enabled our cabin crews to receive notifications during the security checks process; we also made it possible to display and report timeout warnings.

   • Within the scope of flight crew training planning, we continued to improve our optimization application. We enabled weekend classes to be planned and ensured that overseas holidays could be considered in planning. We also launched a new mobile application within the scope of cockpit training and process tracking. With the application, we enabled our instructor pilots to access digitally the forms they need during simulator training and to transmit their inputs and comments in a way that also feeds relevant systems and processes. Thus, we took a major step within the scope of evidence-based training and established the system infrastructure to track pilot assessments.

   • To manage recruitment processes more efficiently, reach the right candidate quickly, and measure and improve candidate experience, we renewed the Candidate Tracking and Onboarding System end-to-end with up-to-date technology and AI support.

   • To enable employees within Pegasus to benefit in their daily work, we developed the Corporate AI Portal to provide access to AI bots through a single platform.

     • Through persona-based authorization, we ensured the automatic presentation

       of content and AI tools suitable for one's own role and function.

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     • We integrated our Human Resources virtual assistant HERO with the application where company HR procedures are maintained, in order to enable employees to access broader information faster and to make processes more efficient by reducing workload in relevant departments.

   • We developed Corporate GPT, enabling all employees at Pegasus to perform activities such as document analysis, summarization, content generation, data analysis, and decision support by using corporate data securely.

   • We developed DocFinder, a document comparison bot that enables units with heavy document traffic-such as Legal, Fleet, and Procurement-to quickly compare across thousands of documents and automatically see differences between different versions.

   • We developed the Emergency Information Collection application, which enables rapid access to employees via notifications through our Corporate Mobile Application and IVR calls during crises and collects status notifications. In this way, relevant teams monitored employees' responses in real time.

   • With the Swift project, we enabled the company's finance operations to become more centralized, traceable, and controllable; we were able to track all bank account movements instantly from a single platform; and we managed account movements, money transfer flows, and banking integrations from a single screen.

   • We carried out work in the Agentic AI domain:

     • With the "I Accountant" application, we ensured that all invoices received by our company were fully automatically parsed, verified, and routed to accounting systems by AI. The system analyzed invoice contents without the need for human intervention, provided accurate and fast data flow to finance applications, eliminated the need for manual control, and created a significant reduction in the operational workload of accounting teams.

     • With the Collection AI application, we ensured that payment and balance notifications sent by agencies via email were fully read, verified, classified, and automatically answered by AI. The AI produced professional responses suitable for the correct scenario by interpreting the agency email and the receipt and MCO/INV attachments, without requiring human intervention.

     • With Agentic AI, we enabled the cabin crew to communicate with hotels for reservation processes based on data coming from Crew Planning System. We also established a structure that enables invoices received from hotels to be compared with the Crew Planning System on a per-person basis.

   • We made Smart MCC available to our MCC team and digitalized the technical support flows from outstations that we previously managed manually via email, phone, etc. We also quickly scored technical support organizations at outstations and forwarded them to our Technical Services Procurement department. In this way, we prevented human-factor-related risks, increased speed for our MCC department, and ensured verification of agreements with external companies we receive services from. In addition, we digitalized the creation of Fleet Current and Handover forms, which also required manual effort.

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     Digitalizing these processes was of great importance to track our fleet's current status instantly. In the Smart MCC application, we created a map for live aircraft tracking for the first time in our company. In this way, we used location data received from our fleet on the map and shared it with requested teams.

   • We consolidated under one roof information of Technical Group Directorate personnel-data that were stored in local accounts on individuals' computers and located across different teams or different digital environments-and we developed an application to enable managers to run processes related to personnel.

   • The information we tracked covered many processes we run in Technical, such as Administrative appreciation & discipline, Duty, Language, Professional Training, Passport & Visa, Experience, Suggestion Evaluation, ODS, Query, KPI/SPI, Premium, Düf Records, Meda Meetings & Just Culture forms, PPE records, etc.; and we migrated these processes to digital and brought them under one roof.

   • We went live with Smart Technic applications with full functionality. Our company successfully implemented digital transformation in aircraft maintenance and operational processes and significantly increased the productivity of technicians, cabin chiefs, and cockpit crew.

   • We migrated six more onboard logbooks to digital. While this digital transformation increased operational efficiency, it also reinforced flight continuity and safety. All these improvements minimized time loss in our flight operations while creating a faster, more accurate, and safer environment in aircraft maintenance processes.

   • Also in 2025, we continued PoC studies to achieve operational excellence in Ground Operations and Aircraft Maintenance-Repair-Overhaul (MRO) activities. We enabled recurrent defects to be reported with AI support; we made it possible for technicians to access technical information quickly and accurately with AI support.

   • Within the scope of efforts to develop analytics and self-service capabilities in our company, we significantly advanced the organization's transformation into a data-driven structure. In this direction, we created the Data Dictionary and Data Catalog; to establish a common data language (Common Data Language) across the organization, we built the necessary infrastructure to manage data from source to analytics in a standard, traceable, and reliable manner. By integrating the "Single Source of Truth" approach into our corporate data architecture, we strengthened data consistency and reliability.

   • We increased self-service analytics capabilities; through the Data Champions model, we supported data ownership and analytics awareness in business units. By applying a common visual language (Common Visual Language) and strong UI/UX principles in the presentation layer, we improved reporting and analytics standards and enhanced user experience. We also completed the infrastructure work for the "Ask Your Data" solution, which we will roll out within the scope of the Generative BI approach.

   • As a result of these efforts, we increased the speed and accuracy of decision-making processes, strengthened operational efficiency and strategic alignment; and with the democratization of data access, we increased employees' capability to generate insights and raised the level of analytics competency.

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   • In 2025, we significantly advanced efforts to manage AI usage at enterprise scale in a reliable, sustainable, and auditable manner. Within this scope, we brought the AI solutions used across Pegasus into a systematic framework in line with ethical, security, risk, and operational sustainability criteria.

   • We established the corporate AI Governance model for AI projects; we standardized model lifecycle management, architectural compliance assessments, hallucination risk controls, and model retirement processes. Thus, we created a transparent, traceable governance infrastructure aligned with corporate principles throughout the development and operation of AI systems.

   • Along with these efforts, we began performing analytical measurements in aviation safety and critical operational areas; we monitored operational excellence indicators regularly and systematically. With this approach, we started efforts to ensure that AI and analytics applications create a more holistic and data-driven impact on flight operations and safety processes.

   • In this direction, we increased the reliability of AI applications and their alignment with corporate context; we strengthened operational continuity and risk management. In addition, through the governance mechanisms we established, we supported longterm corporate value creation by encouraging responsible AI use across the organization.

   • In 2024, we had established Pegasus Innovation Lab in Silicon Valley in the United States to maintain our lead in digitalization and technology in the aviation industry. In 2025, within the scope of the Innovation Lab, we engaged with more than 620 startups; we conducted active work on airline use cases with 150 of them; we completed 30 Proof of Concept (PoC) studies; we continued 20 studies; and we launched 7 projects together with our relevant teams at Pegasus headquarters and with partners we selected in Silicon Valley.

   • In this context, we completed the preparations for Call Center transformation with Voice-AI and launched the project with the solution we reached through the Pegasus Innovation Lab. In this way, we aim to handle incoming call center calls with conversational AI agents.

   • Flight services were an area with many regulations and documentation; flight crews referred to documents on various topics. To facilitate crews' access to documents and to provide summarized information derived from those documents, we carried out preparations for an AI-based bot initiative within 2025 and launched the PoC study.

   • The use of AI in aircraft maintenance services was another focus area for us. We held discussions with different companies and carried out PoC studies in areas such as filtering recurring defects and preparing permanent solution plans, and predicting aircraft maintenance intervals. In addition, we conducted more advanced research on using image and video processing technologies in aircraft maintenance operations. We planned for these efforts to continue in 2026 and envisaged tracking those with completed preparations as projects.

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   • In Ground Handling as well, we held discussions with different startup companies in areas such as identifying aircraft turnaround times via video processing, predicting delays, processes that enable tracking of services received from overseas terminals, new technologies in baggage drop processes, and services related to using video technology in passenger and baggage counting. We plan for these studies to continue in 2026, focusing more on overseas terminals and baggage, and we aim to launch projects with suitable technologies.

   • Today, AI has begun to be used in flight ticket searches. To be able to monitor and control the GEO (Generative Engine Optimisation) process used to understand search intensity and optimize searches, we met with different companies and put the suitable product into use. As it is a new technology, we continued researching different alternatives. Another topic on the commercial side was the initiative we might call Pegasus' Tone. Under this initiative, we aimed to use the same corporate structure (tone) across all Pegasus communication channels. Our research with different companies enriched the topic. We planned to take action on either procuring a solution from a company or addressing it through in-house integration.

   • We continued information-sharing sessions with different airlines around the world in 2025. We focused on topics such as emerging Agentic-AI infrastructures and Data Analytics.

   • We focused on university collaborations as one pillar of the Pegasus Innovation Lab. Together with Berkeley University, we discussed the topic of "Future Air Travel" with MBA students. We generated new insights on biometric and digital transitions and baggage drop capabilities. Another research topic on the academic side was our prediction-based study on flight safety. Domestically, we supported and became a member of the AI Platform formation led by Özyeğin University; and we completed term-project studies with the university on Customer Life Time Value and Churn Analysis.

   • Pegasus Innovation Lab established direct engagement with global technology companies and developed strategic collaborations that advanced Pegasus' operational and commercial capabilities. We took steps with Apple to enhance the customer experience in lost baggage tracking; conducted exploratory studies with OpenAI on search and generative AI-based API use casesThese engagements did not focus solely on technology procurement; they also supported positioning Pegasus as a design partner in early-stage product development processes.

   • Within the scope of its strategic investment model, Pegasus Innovation Lab positioned Pegasus not only as a technology user but also as an investor and a value-creating business partner. Through the CVC approach we structured in 2025 and Silicon Valley-based collaborations, we began implementing design partnership, sweat equity, and direct investment models with early-stage ventures. With this model, we aimed to secure early access to critical technologies while also generating financial and strategic value in high-growth potential startups. In 2026, we planned to further systematize this approach and enhance the investment-usage synergy for new technologies.

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3. COMPANY'S BUSINESS AND MATERIAL DEVELOPMENTS RELATING TO THE COMPANY ACTIVITIES

International Aviation Market

According to IATA's (International Air Transport Association) "Air Passenger Market Analysis" published on January 29, 2026, world total passenger traffic measured in RPK (Revenue Passenger Kilometers) grew by 5.3% YoY in 2025. Industry RPK's had grown by 10.4% in 2024. In Europe, RPK increased by 5,3% YoY, parallel to the market growth, while in Middle East, RPKs were 6.8% higher YoY in 2025. IATA expects the industry RPK to increase by 4.9% in 2026, driven by 4.8% capacity growth (in ASK - Available Seat Kilometer) and 0.1ppt increase in load factor to 83.8% ("Global Outlook for Air Transport - December 2025, published on December 9, 2025).

Turkish Aviation Market

According to the data published by the General Directorate of State Airports Authority (DHMI), the number of total passengers in Türkiye grew by 7% YoY in 2025 following the 8% YoY growth recorded in 2024. As for a breakdown, domestic passengers in Türkiye grew by 7% YoY while international passengers increased by 8% YoY in 2025.

Development of Pegasus Airlines Market Share Since 2005

Following the acquisition by Esas at the beginning of 2005, we changed our business model, introducing a low-cost network carrier model and focused on providing an 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.

However, parallel to the decline in demand and negative impact of the travel restrictions with the COVID-19 pandemic, our total booked passenger number declined by 34% in the two-year period from 2019 to 2021. In the same period, total number of passengers in the overall Turkish market contracted by 38%. In the 2022-2025 period, our booked passenger number grew by 17% on average annually, further outpacing the 11% average annual growth realized in the total Turkish market. The table below indicates Pegasus market share trend in terms of domestic and international scheduled passenger numbers between 2022 and 2025:

Pegasus Market Share Data (2022 - 2025)

Source: Pegasus Airlines (carried passengers), DHMI

Explanations on the Company's Production Units, Information on Sales, Sales Conditions and Productivity

Comparative data on our Company's revenue generating activities, sales, and productivity in 2025 is provided in Section 5/C of this Report.

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Information relating to our fleet as of December 31, 2025, is shown below:

AVERAGE

FLEET AGE

SEAT CAPACITY

NUMBER OF AIRCRAFT

(KM)

TYPE

AIRCRAFT RANGE

31.12.2025 31.12.2024

Growth

(%)

31.12.2025 31.12.2024

Growth

(%)

31.12.2025

In July 2012, we placed an order with Airbus for 57 firm order A320neo and 18 firm order A321 neo aircraft, totaling 75, and an additional 25 optional aircraft, thereby constituting a purchase order for 100 new aircraft. This was the largest single aircraft order in Turkish civil aviation history at the time. In December 2017, we exercised our option for 25 additional aircraft and converted these option aircraft to firm orders in A321neo configuration. In October 2021, we placed an order with Airbus for 6 additional A321neo aircraft, and in June 2022, we placed an order with Airbus for 8 additional A321neo aircraft and in July 2023, we placed an order with Airbus for 36 additional A321neo aircraft. The 2012 Airbus Order, as amended, comprised a total of 42 A320neo and 108 A321neo aircraft. Pegasus is the first customer of CFM-Leap series engine used on A320neo aircraft. 9 A321NEO aircraft joined Pegasus fleet in 2025.

In line with our fleet management strategy and in addition to the existing firm aircraft orders, in December 2024 we placed an order with Boeing covering up to 200 B737-10 aircraft to satisfy our aircraft requirements envisaged for 2028 and beyond. As part of this agreement, we placed a firm order for 100 B737-10 aircraft with expected deliveries starting from 2028, and secured options for up to 100 additional B737-10 aircraft, convertible to firm orders in the upcoming years.

The delivery schedule for the A320neo/A321neo aircraft under our Airbus order and the B737-10 aircraft under our Boeing order is as follows:

Our Internal Audit Department was first established in June 2006 and since April 2011, our Internal Audit Department has been working under the auspices of the Audit Committee. The Audit Committee was reorganized on August 17, 2013, to align its structure with the Principles determined by the Capital Markets Board.

The establishment of an efficient internal control system at Pegasus Airlines is carried out under the responsibility of the Board and under the scrutiny of the Audit Committee. In this context, the Committee takes into consideration information received from the Company management, the Internal Audit Department and the independent auditor and shares its opinion and recommendations on internal controls with the Board.

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The Audit Committee ensures that all actions are taken so that internal controls can be carried out in a sufficient and transparent manner. Pegasus Airlines Internal Audit Department performs its task under the scrutiny of the Audit Committee and according to the audit plan approved by the Committee. Besides the internal control function operated by the Internal Audit Department, we benefit from the work of various operational internal control units acting as part of management in accordance with civil aviation rules and Company policies.

As of December 31, 2025, our Internal Audit Department of Pegasus is formed by our Group Head of Internal Audit, IMS & Business Excellence, Lead Internal Auditor, four Internal Auditor and one IT Auditor, one Internal Control specialist, one Business Excellence Leader, two Business Excellence specialist and one Business Excellence support specialist.

The table below lists information relating to our direct subsidiaries and joint ventures as of December 31, 2025. As of December 31, 2025, we did not have any indirect subsidiaries or joint ventures. We were not subject to any cross-shareholding in 2025.

Affiliation

With the aim of increasing our capabilities in digitalization and technology in the coming years and evaluating opportunities across the globe, our subsidiary Pegasus Airlines Innovation Lab, Inc. has been operating in Silicon Valley in the USA since the end of 2023. In 2025, our Board of Directors resolved on the establishment of Pegasus Airlines Ventures in the USA where the Company will be the sole limited partner, with the aim of seizing investment opportunities in Artificial Intelligence focused technology ventures which our Company collaborates through Pegasus Innovation Lab. Pegasus Airlines Ventures will be positioned as a corporate venture capital fund to evaluate investment opportunities in identified ventures.

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Furthermore, subsidiary incorporation for carrying-out the share acquisition in the Smartwings Group as per our Material Disclosure Announcement dated December 8, 2025, was completed, and our fully-owned subsidiary Pegasus Europe was incorporated as of December 10, 2025 and registered with the trade registry in the Netherlands as of December 11, 2025.

There were no share buyback transactions for the year 2025.

Pursuant to the Pegasus Share Buyback Policy adopted by the resolution of Board of Directors dated November 20, 2013, and amended on December 16, 2021, we will implement any share buyback or accepting our own shares as lien in accordance with the mandatory provisions of the Turkish Commercial Code and the rules determined by the Capital Markets Board under the authority granted by the Capital Markets Law and all share buyback transactions are publicly announced within the framework of the regulatory framework.

There were no requests for special audits by Pegasus shareholders in 2025.

In 2025, we were subject to several planned and non-planned investigations and audits by various civil aviation authorities, authorized environment protection, consumer protection, data protection, competition, fiscal and labor bodies in Türkiye and in several other countries where we perform operations, with respect to operational, technical, environmental, and regulatory compliance. Our operations may, from time to time, be subject to routine or one-off investigations by other administrative bodies authorized in Türkiye and abroad. As a result of the said inspections and audits, we paid administrative fines in the amount of ₺ 13,406,175.28.

The following legislative and regulatory changes in 2025 were important for our operations and triggered considerable work in terms of compliance planning and execution:

• The "Communiqué on Keeping Non-Accounting Books of the Business in Electronic Form," published on February 14, 2025 on the Official Gazette, made it mandatory for businesses to keep and store commercial books not related to accounting (share ledger, board of directors' resolution ledger, board of managers resolution ledger, and general assembly meeting and negotiation ledger) in electronic format until September 1, 2025. With the "Communiqué Amending the Communiqué on Keeping Non-Accounting Commercial Books of the Business in Electronic Form," published on September 20, 2025, the deadline for obtaining physical book closure certification was extended, while it was made mandatory to keep the share ledger and the general assembly meeting and negotiation ledger in electronic format, and an option was provided to keep board of directors resolution ledgers in physical format. Transition to keep the books in electronic format and compliance was achieved in the legally stipulated timeframe.

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• Cybersecurity Law No. 7545 was published in the Official Gazette on March 19, 2025 and entered into force on the same date. The Law sets out sanctions that may be applied in the event of non-compliance with obligations regarding duties and responsibilities related to cybersecurity when using information systems. It is stipulated that all public institutions and organizations, as well as natural persons and legal entities are responsible for taking the necessary measures to prevent cyberattacks or to mitigate their impact. Compliance with the new law has been integrated into our cybersecurity compliance framework shaped by existing international, national and industry standards and commitments.

• The Communiqué on Procedures and Principles Regarding Information Systems Management (VII-128.10) entered into force on June 30, 2025. The Communiqué, which sets out the procedures and principles for managing information systems, explains the fundamentals of information systems management and controls, and addresses topics such as information security policies, access management, risk analysis, penetration testing, data privacy, procurement of external services, and response to cyber incidents. Compliance with the new communiqué has been integrated into our information security compliance framework shaped by existing international, national and industry standards and commitments.

• The Climate Law was published in the Official Gazette on July 9, 2025 and entered into force on the same date. The law is expected to consolidate our ongoing work on climate change under a new regulatory framework within the scope of the law.

• The SHT-SAF Instruction was published by the Turkish Directorate General of Civil Aviation (SHGM) on June 26, 2025. The instruction grants SHGM the authority to set mandatory Sustainable Aviation Fuel (SAF) usage ratios based on which, SHGM announced its emission reduction targets based on jet fuel consumption in 2026. Subject to SHGM-set mandatory SAF utilization ratios, operational costs may rise as of 2026 and in the following years. Work is underway to secure procurement of required products.

As of December 31, 2025, Pegasus Airlines or its consolidated subsidiaries are not defendants in any lawsuit the outcome of which, alone, is expected to affect the Company's financial status and its operations, especially that would affect the Company's scheduled and unscheduled flight operations. The total risk arising from these lawsuits and the contingency allocation for the said risk as of December 31, 2025, as well as information on lawsuits that have not been made subject to any contingency calculations but, if finalized against Pegasus Airlines, may affect the Company's financial status and its shares in subsidiaries negatively are provided in Note 15 to the Consolidated Financial Statements for the Accounting Period between January 1 - December 31, 2025. The said financial statements are available on our Investor Relations Website.

Save as disclosed in Section 4/F of this Report, there were no administrative or judicial sanctions imposed against Pegasus or our Board members for any action in violation of the law in 2025.

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There is no shareholder decisions adopted at the Annual General Assembly Meeting held in 2025 that are not fulfilled. Our operational results in the year 2025 were periodically shared with the investor community.

There were no extraordinary General Assembly meetings held in 2025.

Pegasus carried out donations, charitable contributions and social responsibility projects in line with the Pegasus Donations and Charitable Contributions Policy and the Pegasus Corporate Social Responsibility Policy in 2025. Both policies are available on our Investor Relations Website.

At the Annual General Assembly Meeting held on March 28, 2025, the General Assembly, in accordance with Article 19 of the Capital Markets Law No. 6362 and Article 11 of the Company Articles of Association, determined the ceiling for donations to be made by the Company in 2025 as ₺75,000,000.

The donations we made in 2025, totaled ₺ 73,702,200. 61% of the total donations were made for civil aviation, 36.5% were made for education purposes, 1.9% were solidarity related and 0.6% were made for environmental purposes.

Pursuant to Article 199 of the Turkish Commercial Code, the Board of Directors is required to prepare a report with respect to our Company's transactions with its controlling parent Esas and other entities controlled by Esas and disclose the outcome of this report in the Annual Activity Report.

The relevant report prepared by the Company's Board of Directors on March 4, 2026, notes that "in all transactions between the Company and Esas Holding or its subsidiaries between January 1, 2025 and December 31, 2025, according to the circumstances and conditions known to us at the time the transaction was made or a precaution was taken or not taken, an appropriate consideration was received, there are no precautions the Company has refrained from and there are no transactions or precautions that would require a settlement."

Information on related party transactions entered by our Company and our subsidiaries is provided in Note 5 to the Consolidated Financial Statements for the Accounting Period between January 1 - December 31, 2025. The said financial statements are available on our Investor Relations Website.

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