Air Arabia swings to profit in 2021 as travel demand recovers and restrictions ease

Low-cost airline's revenue for 2021 up 71% year-on-year as travel restrictions ease

Air Arabia's board proposed a dividend distribution of 8.5 per cent of share capital for 2021. Photo: Air Arabia

Middle East budget airline Air Arabia swung to a full-year profit in 2021 as governments around the world began to ease travel restrictions and passenger demand started to recover.

Net profit reached Dh720 million ($196m) for the year ended December 31, up from a loss of Dh192m in 2020 that was heavily affected by pandemic-related curbs on air travel, Air Arabia said in a statement on Monday. Revenue increased 71 per cent year-on-year to Dh3.17 billion in 2021 as the airline's passenger numbers increased.

“Air Arabia’s full year record profitability is a testament to the strength of the business model we operate, the group’s management team, as well as the diversification and growth strategy adopted,” Sheikh Abdullah bin Mohammad Al Thani, chairman of Air Arabia, said.

“The year 2021 continued to be challenging for the aviation industry worldwide because of the lasting impact of the Covid-19 pandemic and the restrictions it imposed on air travel. Despite that … Air Arabia managed to deliver such a performance, signalling a steady recovery for the industry.”

Pressure on airlines' profitability has eased since the fourth quarter of 2021 and that improvement is expected to continue this year with recovering passenger traffic and strong cargo demand, a recent survey by the International Air Transport Association found.

UAE-listed Air Arabia has been pushing ahead with expansion after the Covid-19 pandemic as low-cost airlines bet on a recovery in short-haul travel demand amid rapid vaccine campaigns around the world. Air Arabia signed three joint-venture deals to establish new airlines in Abu Dhabi, Armenia and Pakistan.

The airline carried more than 6.7 million passengers in 2021 from its five hubs in the UAE, Morocco and Egypt, an increase of 54 per cent on 2020.

The average seat load factor — the number of passengers carried as a percentage of available seats — reached 73 per cent.

Air Arabia's fourth-quarter net profit rose to Dh467m, from Dh20m in the same period in 2020, marking its fifth consecutive profitable quarter since the pandemic started, it said.

Revenue for the final quarter of 2021 more than doubled year-on-year to Dh1.3bn.

Higher passenger demand and stronger yield margins, combined with the cost control measures adopted by the airline since the start of the pandemic, contributed to the fourth-quarter performance, the chairman said.

Air Arabia carried more than 2.5 million passengers from its five hubs in the last three months of 2021, double the number of passengers carried in the same period a year earlier.

The average seat load factor increased by 6 per cent, reflecting the increase in demand for air travel during the last quarter, to stand at 81 per cent.