Dubai: Air Arabia reported on Wednesday a 12 per cent drop in second quarter profits as geopolitical and economic shocks weighed on margins
Listed on the Dubai Financial Market, the Sharjah-headquartered airline made Dh151.1 million in the three months to June 30, 2015, down from the Dh172.7 million it reported for the same period a year ago, according to an emailed statement. Second quarter revenue slid 6 per cent to Dh860 million from Dh915 million a year earlier.
“The economic performance from Russia and CIS (Commonwealth of Independent States) and the impact of oil prices on the global economy in addition to regional political instability have all served to put press on yield margins across the entire aviation sector,” stated Air Arabia Chairman Shaikh Abdullah Bin Mohammad Al Thani.
Al Thani said the airline is “confident” the pressures “are temporary and will be mitigated in the coming quarters when the long-term investments we have made into the business, come fully on stream.”
Air Arabia profits fell despite airline fuel bills having generally been trimmed over the past 12 months as global oil prices continue to weaken. In the second quarter, benchmark Brent crude hit a high of $71.37 a barrel compared to $107.75 in the same period a year ago.
In February, the airline said its fuel hedging portfolio “will regain its benefits going forward” after a “temporary downward trend.”
Over the first six months of 2015, the region’s largest low cost airline made Dh236.9 million, which is 4 per cent less than the Dh247.6 million it reported a year ago. Half-year revenue was flat at Dh1.74 billion.
The airline carried 1.8 million passengers in the second quarter, which is 4 per cent more than a year ago, and a total of 3.6 million passengers in the first half up of the year, up 9 per cent.
Earlier this year, Air Arabia opened its fifth hub at Queen Alia International Airport in Amman, Jordan. It also has hubs in Egypt, Morocco and Ras Al Khaimah.
