Dubai: Flydubai reported a Dh147.4 million ($40 million) half-year loss on Sunday, citing weak demand on Russian routes and the suspension of services to Ukraine, Iraq and Yemen.
The airline also said a strengthening United States dollar has also put pressure on its profitability. The dirham is pegged to the dollar.
Revenue for the first six months ending June 30, 2015 rose 8.7 per cent to Dh2.2 billion ($600 million). A year ago, Flydubai made a profit of Dh53.1 million ($14 million) and revenue of Dh1.88 billion ($515 million) in the first half of 2014.
In statement on the Nasdaq Dubai, where it has a listed $500 million sukuk, the airline said the “changing economic landscape” has put pressure on newly established routes.
Flydubai has launched 18 new routes so far this year.
The airline pointed to weak demand out of Russia, where the economy has staggered over the past 18 months due to the impact of western sanctions and the falling oil price.
However, flydubai said a “dampening of demand” from Russia and former Soviet states “is expected to be temporary” and there is “further opportunity” for the airline to open new routes across its flying radius, which is about six hours.
Flydubai launched two new Russian routes so far this year, bringing its Russian network to ten destinations. Flights to Ukraine, except Odessa and Kiev, also remain suspended.
The airline said it is also facing challenges in the Middle East with conflicts raging in Iraq and Yemen.
“Expanded military activity in the north of Iraq has disrupted the company’s operations and saw flights to Arbil suspended at the beginning of the year restarting towards the middle of the year and flights to Sulaimaniyah remain suspended,” the airline said.
Flydubai has also suspended services to Aden and Sana in Yemen and is rerouting some flights to Africa to avoid the country's airspace, which has seen in increase in flying time and a cut in payload.
Flydubai added 33.6 per cent more capacity in the first half of year 2015, which the airline said negatively impacted its yield by 12 per cent.