Dubai: Air Arabia reported on Thursday a 24 per cent decline in its net profit for the second quarter of 2018 driven by lower margins and higher fuel costs.
The Sharjah-based carrier recorded Dh120 million in profits in the quarter compared to Dh158.5 million in the same quarter of 2017. The earnings put profits in the first half of this year at Dh230 million, down 12 per cent year-on-year.
In a statement, the low-cost carrier said the earnings came amid “economic pressure that airlines witnessed in the second quarter of this year, which was driven by lower yield margins, higher fuel prices, and seasonality shift in traffic that the market has experienced.”
The decline in profits came even as revenues inched up, with revenues for the second quarter up nearly 4 per cent year-on-year to reach Dh938 million. Revenues for the first six months of this year reached Dh1.8 billion, a 5.8 per cent increase over the same period last year.
Shaikh Abdullah Bin Mohammad Al Thani, chairman of Air Arabia, said trading conditions continue to be influenced by “regional geopolitical and economic challenges,” but the outlook for low-cost travel in the region remains “very strong”.
“The global aviation industry had to cope up with pressing economic challenges during the second quarter of this year, and we are glad to see Air Arabia continuing to deliver strong financial and operational performance while maintaining its momentum growth across the breadth of its network,” he said in a statement.
The chairman added that Air Arabia will continue to focus on expanding its reach and operational efficiency.
During the first half of 2018, the airline carried 4.2 million passengers.
In late June, Air Arabia said that it has $336 million (Dh1.2 billion) invested in funds under Abraaj, the private equity firm that filed for provisional liquidation in the Cayman Islands. The carrier’s exposure to Abraaj was through fund portfolios and short-term investments, the latter of which drove concerns among investors.
Air Arabia said at the time that the Abraaj exposure will have “no significant impact” on its daily or future business or on its liquidity status, a statement it reiterated on Thursday.
“As the court-supervised restructuring of Abraaj’s financially stressed funds is currently taking place, Air Arabia’s appointed team of experts continues to be actively engaged with the appointed JPL’s (Joint Provisional Liquidators) as well as all stakeholders and creditors involved in this matter to ensure that the rights of investors — including Air Arabia — are preserved,” the statement said.
The company did not publish its full financial statement on Thursday so costs and any investment losses or provisions from investing in Abraaj were not immediately available.