Air Arabia profit down 10% to Dh103m
Air Arabia, the
Sharjah-based carrier, reported on Sunday Dh103 million in net profit for the
first quarter of 2017, marking a 10 per cent drop over the Dh114 million
recorded in the same period in 2016.
In a statement, Air Arabia said it posted a first-quarter
turnover of Dh810 million, a 14 per cent decline over the first quarter in
2016. The airline said the decline came amid a drop in yield margins across the
industry over the first three months of the year.
The profits for the first quarter, though lower year-on-year,
are a turnaround from the Dh38.6 million in losses recorded by the carrier in
the fourth quarter of 2016. The loss at the time came well below market
expectations, with the consensus being for a fourth quarter profit of Dh57
million. Air Arabia attributed the results to challenges in the global aviation
market.
In Sunday’s statement on first-quarter performance, however, the
airline struck a different note, discussing confidence in growth.
Shaikh Abdullah Al Thani, chairman of Air Arabia, said the
carrier continued to see strong passenger demand, and that he remained
confident “of the growth prospects of the low cost travel segment in the
region”.
“We believe the market economic and trading conditions are on an
improving trajectory, and we are optimistic that this will reflect positively
on the industry’s performance for the rest of the year,” he stated.
Average
seat load factor
Air Arabia said
it carried more than 2.1 million passengers between January and March 2017, in
line with the number of passengers it carried in the first quarter of last
year.
Its average seat load factor (or passengers carried as a
percentage of available seats) during the quarter reached 81 per cent.
“The challenge for this industry is, first, the cost, which is
fuel prices, and that’s a major component. The second challenge is the
utilisation factor, or the load factor, so they need to watch their capacity.
Another issue is the competition, currency, and prices, so those are the major
issues to watch for,” said Tareq Qaqish, managing director of asset management
at Menacorp.
Airlines in the region have been citing currency fluctuations as
one of the challenges impacting their performance. In November 2016, Emirates
reported a 75 per cent year-on-year decline in profits for the first half of
the 2016-2017 financial year, and cited a stronger US dollar as a factor
impacting the decline.
From an operational perspective, Air Arabia added one new route
from its main hub in Sharjah in the first quarter, with flights commencing to
Baku in Azerbaijan. The carrier also took delivery of one new aircraft in that
period, bringing its current fleet to 47 Airbus A320 aircraft operating to 126
routes across the Middle East, Africa, Asia, and Europe.
The company hasn’t yet released its financial statement to the
Dubai bourse where it is listed.
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