Air Arabia profit hit by excess capacity in the market

An Air Arabia plane sits on the tarmac at Ras Al Khaimah International Airport. Sarah Dea / The National

The budget airline Air Arabia, based in Sharjah, reported a 14 per cent year-on-year dip in its second quarter net profit owing to excess capacity in the market, the company said.

Net profit at the airline touched Dh131 million, the Dubai-listed company said in a statement.

The drop was attributed to a regional shift in travel trends during Ramadan and excess capacity in the market “which is affecting airlines’ yield margins”, said the carrier.

“Despite the continuous pressure on yield margins that airlines are witnessing and the challenges associated with the regional economic outlook, Air Arabia continues to deliver solid financial performance and momentum growth,” said Sheikh Abdullah bin Mohamed Al Thani, the chairman of Air Arabia. “We remain optimistic about the outlook of low-cost travel in the wider region.”

Revenue reached Dh894m, an increase of 4 per cent during the second quarter. Air Arabia flew over 2 million passengers during the same period, rising 12 per cent. During the second quarter, the airline’s average seat load factor – a measure of filled seats compared with available seats – was 78 per cent.

Air Arabia competes with flydubai and other low-cost airlines that use Sharjah and Dubai airports. Flydubai operates 50 Boeing 737-800 aircraft. During the first half, Air Arabia received three new A320s, growing its fleet to 43 Airbus A320 aircraft.

Air Arabia’s first-half net profit was Dh245m, an increase of 3.5 per cent compared to Dh237m last year. Revenues for the per­iod touched Dh1.84 billion, up 5.5 per cent from Dh1.75bn during same period last year.

Air Arabia flew 4.1 million passengers during the first half, up 14 per cent, as the average seat load factor was 79 per cent.

Its shares were flat at Dh1.46, down from Dh1.49 a year ago.

It added flights to Sarajevo in Bosnia and Herzegovina during the first six months and launched a new route from Amman to Riyadh. Air Arabia Maroc launched two new routes connecting Marrakech to Pau, in France, and Fez to Toulouse, France.

Air Arabia flies to 120 destinations from its hubs in Sharjah, Ras Al Khaimah, Casablanca in Morocco, Alexandria in Egypt and Amman, Jordan.

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