Air Arabia plans second hub

Dubai: Sharjah-based budget carrier Air Arabia may open a second hub in the Middle East, the Mediterranean region or India, which would help the budget carrier solidify its route network.

CEO Adel Ali said he was in preliminary planning stages to open a second base of operations, after recording a 33 per cent increase in net profits in the first quarter of 2007 to Dh43.4 million, compared with the previous quarter.

A second hub for Air Arabia, which completed an initial public offering in March, would help the budget carrier solidify its route network, link in high-value markets in surrounding regions such as the Europe, and give it a leg up to new budget carrier upstarts in the Middle East.

Very confident

"We feel very confident going forward into 2007, and we are looking at other opportunities to set up hubs in the Middle East and India, and we are working on those things," Ali said during a press conference at the Arabian Travel Market yesterday. "There are a lot of areas in the Middle East marketplace that are opening up."

Asked where Air Arabia might set up another hub, Ali named the Levant region, the Mediterranean, and "east of the UAE."

However, Ali noted that many plans hadn't yet reached the discussions stage with relevant authorities because some countries it was looking only recently relaxed restrictions on foreign investment.

"We have an open view of where we should be," he added. "We take our name Air Arabia literally, and we would be happy to be based wherever in the Arab world."

Air Arabia's March listing on the Dubai Financial Market in March raised Dh2.56 billion to finance its fleet expansion of up to 34 new planes by 2015, as well as being used to develop a second hub. Created in 2003, Air Arabia became profitable in 2005.

In its first quarter results, Air Arabia said net profits were Dh43.4 million on revenues of Dh252 million. The airline carried 580,000 passengers, up 17 per cent compared with the previous quarter.

During a winter season that is normally a lean period for Gulf airlines, Ali said he was pleased to report an 80 per cent seat load factor.

"At a time when Air Arabia is in full expansion mode, including more flights and destinations and new ancillary services, we are proud that our financial fundamentals remain on a strong upward trend."

"Dh43 million in their worst quarter is more than they thought they were going to get," said Makram Kubeisy, a managing director of Shuaa Capital's investment banking division, who served as the lead bookrunner for the Air Arabia IPO.

"In this industry, the best quarter is usually the last quarter of the year, and the worst is the first quarter. So this is quite an accomplishment."