The global energy demand is forecast for more growth in the mid- to long-term, and rising to a significant 23 per cent by 2045 if the world economy more than doubled in size. The population base is expected to be 1.6 billion between now and 2045, leading to an annual additional requirement of an average of 2.7 million barrels of oil equivalent a day up to 2045.
Rising energy demand has resulted in the board of ADNOC approving plans to forward the company's expansion of its 5 million barrel per day oil production capacity to 2027 from a prior target of 2030. This development bodes well for ADX-listed Abu Dhabi Aviation (ADA), holding a market cap of Dh2.75 billion.
Abu Dhabi Aviation is the largest commercial helicopter operator in the Middle East, providing support to, primarily, the offshore oil industry and offering other services such as firefighting, emergency medical, seismic surveys, and also to the engineering and construction industries. In addition to flight charter, the company provides MRO (Maintenance, Repair and Overhaul), flight training and luxury jets through its subsidiary Royal Jet.
The company’s stock has generated an impressive year-to-date performance of 26 per cent for its investors.
Healthy financials
The ADA group posted revenues of Dh1.40 billion in the nine-month ended September 2022, compared to Dh1.16 billion the previous year. The 20.5 per cent growth was driven by additional oil and gas offshore flights as well as ad hoc flights. The combined contribution of helicopter and fixed-wing operations and commercial aircraft operations totalled 75 per cent of revenues.
During the nine months, commercial aircraft operations and air cargo saw a growth of 52.7 per cent and 16 per cent year-on-year.
ADA saw its profitability increase from Dh203 million to Dh317 million for the nine-month period. The resilience helped overcome significant challenges such as market volatility, distribution bottlenecks, and disruptions to OEM production of certain spares/components.
Future strategy
ADA’s vision involves expanding its operation locally and globally. The company has started taking steps towards expanding its feet and replacing aircraft in line with the demand. It owns and operates 58 aircraft, including 51 helicopters and seven fixed wings. From a risk mitigation aspect, ADA continues to diversify its investments to balance the effects of global markets and the cyclical nature of the economy.
