Air Arabia set to take off for China

Air Arabia, the Sharjah-based budget airline, is evaluating plans to launch flights to China.

Air Arabia is eyeing new routes to China after the Sharjah-based budget carrier recently secured traffic rights to operate in the world's second largest economy.

“The Government of the UAE have been in bilateral discussions with the Chinese government, and we secured some good rights to the country and we will be launching those in the not too distant future,” the carrier’s chief executive, Adel Abdullah Ali, said yesterday.

“The Chinese economy has been growing sustainably. The country has a big population and has the right criteria for any airline or business to operate. Trade between the UAE and China has been fantastic … for the last two decades.”

Air Arabia was in the process of evaluating airports and routes that are within a range of five to six hours, Mr Ali said.

Carriers in the UAE have benefited from rising passenger traffic as the country develops its aviation hub status.

Last year, Air Arabia added new routes including flights from its base in Sharjah to Kazan, Rostov and Ufa in Russia; Odessa in Ukraine; Astana in Kazakhstan; Ta’if in Saudi Arabia; Salalah in Oman; and Erbil and Basra in Iraq.

The airline took delivery of eight new aircraft this year as part of an order for 44 aircraft placed in 2007, which will more than double the size of its fleet by the completion of delivery in 2016. It is expecting 10 next year and 10 in 2015.

“We are now looking at our future requirements post-2016,” Mr Ali said, adding that Qatar Bank had completed the financing for next year’s aircraft delivery as a syndicated loan from GCC and UAE banks.

“Right now it is inexpensive to go to the market and get money,” he said.

Gulf banks avoided financing aircraft-purchase deals in the past, but growth in the sector has prompted them to compete with international lenders in that market.

“This is the first deal we did with a GCC bank, US$350 million that takes us right up to 2014. Previously we had a year of JPMorgan, Bank of Japan and a German bank last year,” Mr Ali said.

“It was disappointing in the past for GCC banks not to participate. I understand aircraft financing facilities are sophisticated transactions. But this deal we did, at least five to six banks in the UAE contributed to it. It was pleasing that all of them came with offers and documents as sophisticated as international banks would do.”

Air Arabia shares, listed on the Dubai Financial Market, have risen 120 per cent in the past 12 months. They fell 2.7 per cent yesterday to close at Dh1.42 each.

The airline is due to release its third-quarter results when the earnings season begins after the Eid holidays.

It made Dh75.6m in the second quarter, compared with Dh66.16m in the same period last year.