Business | Aviation
Air Arabia profit declines 5.6 per cent
Pressured by rising comptetition, Sharjah-based budget carrier reports decline in net profits
- By Nadia Saleem, Staff Reporter
- Published: 17:53 November 10, 2010
- Image Credit: Supplied picture
- Operations of Air Arabia have grown after the introduction of new destinations and increasing frequencies to existing ones.
Dubai: Pressured by rising competition, Air Arabia posted a 5.6 per cent decline in third quarter net profit to Dh136 million compared to the same period in 2009, the airline reported Wednesday.
Revenues increased by 4 per cent to Dh568 million, and the seat load factor — passengers carried as a percentage of available seats — rose 8.5 per cent to 84 per cent last quarter compared to the same period in 2009. It carried 1.14 million passengers in the three-month period, at an increase of 14 per cent compared to the third quarter last year.
Quarter on quarter, the airline has managed to improve revenues and net profits after it saw a decline of 44 per cent to Dh50 million in profits in the second quarter. It also beat analyst's expectations that forecast a profit of Dh90 million.
"We will continue to provide value-for-money offerings and innovative products that have benefited over 15 million passengers that we have served," Shaikh Abdullah Bin Mohammad Al Thani, chairman of Air Arabia, said in a statement yesterday.
New destinations
Operations of Air Arabia have grown since the introduction of new destinations and increasing frequencies to existing ones, with the focus on Europe and Africa. Air Arabia Egypt will see operations start from Alexandria's new Burj Al Arab Airport in a few weeks.
Chief executive Adel Ali earlier told Gulf News that he expects 30 per cent growth from its new hub as it ramps up operations.
"Air Arabia's figures, while showing strength in rising passenger numbers, also show that competition, particularly from flydubai, is starting to hit them hard," said Saj Ahmad, an aerospace and airline analyst in London at FBE Aerospace. It received the first of 44 Airbus A320s ordered two years ago. It will take delivery of another one this year, and six more next year. Some of these will be placed in Morocco and Egypt.
Its joint-venture budget carrier in Jordan is expected to be launched in a few weeks.
"This competition has severely depressed air fares and as a result the knock-on effect is lower profitability and even losses on some sectors where discounting has been heavy. This sort of activity is something the GCC will see more of as competition heats up," Ahmad said.
More from Aviation
More from Business
Business Editor's choice
-
Duty Free seeks additional funds
Expects to finalise financing deal in a couple of weeks following strong interest from banks
-
More rooms at the budget hotels
Sector offers good potential for profitable investment as 3,000 new rooms expected
-
Giving a flair to high-profile marriage events
Rimjhim Events — which charges $20,000 on average to manage a destination wedding — is extending its reach into India and the Far East
