Flydubai reports first annual loss since 2012

Dubai: Flydubai reported on Wednesday its first annual loss since 2012, with Dh159.8 million in losses during 2018 on the back of higher fuel costs and unfavourable currency exchange rates.

The figure for the full year brings profits in the second half of 2018 alone at Dh157 million, down 14.5 per cent over the Dh179.8 million recorded in the same period in 2017.

The budget carrier described 2018 as a “challenging year” and said its earnings were impacted largely by fuel costs, which resulted in a Dh411 million hit to operating costs, as well as higher interest rates, and currency fluctuations.

The losses for the year came despite higher revenues, which reached Dh6.2 billion in 2018 — up 12.4 per cent year-on-year. Flydubai carried a total of 11 million passengers in 2018, up slightly from the 10.9 million passengers in 2017.

“Following our half-year results, we continued to focus on further efficiency programmes across the business and these have resulted in a better second half,” said Francois Oberholzer, chief financial officer of flydubai. “The emphasis we have put on these programmes is expected to result in an improvement to our financial performance.”

In terms of costs, fuel accounted for 29.8 per cent of total operating costs, compared to 25 per cent in 2017. Meanwhile, yields improved by 8.4 per cent year-on-year.

“Volatility in fuel prices, coupled with global geopolitical developments and its effect on demand for international air travel, is expected to keep some pressure on yields and passenger numbers in the near to medium term,” the carrier said in its statement.

Looking ahead, Gaith Al Gaith, flydubai’s chief executive officer, said the airline is “cautious,” but also confident about the untapped opportunities in the market and the demand for travel.

As for funding plans, flydubai closed two financing structures in 2018 to support the delivery of Boeing aircraft. The carrier said it “continues to see strong appetite for financing of this fuel-efficient narrow-body aircraft.”

It also expects to continue to finance future deliveries using the current structures.

Flydubai also secured a financing facility through a consortium of banks with a tenure of 10 years to support the construction of its new headquarters, which will be complete in the first half of 2020.