Sharjah-based Air Arabia reported a net profit of AED 509m ($138.5m) in 2016, which marks a 4 per cent decline compared to the figure reported a year earlier.

The carrier’s full-year revenue remained flat at AED3.8bn.

Deteriorating margins arising from overcapacity in the market and slow economic growth in major economic hubs strongly affected the airline’s fourth quarter 2016 financial performance, Abdullah Bin Mohammad al-Thani, Air Arabia chairman, said in a statement.

Air Arabia reported a net loss of AED33m and 15 per cent drop in revenue, at AED956m, in the final quarter of 2016 compared to the corresponding period in 2015.

The airline carried 8.4 million passengers in 2016, marking a 12 per cent increase in passenger numbers year-on-year. This resulted in an average seat load factor, or passengers carried as a percentage of available seats, of 79 per cent.

Air Arabia’s board of directors has proposed a dividend distribution of 7 per cent of share capital, which is equivalent to 7 fils per share. This proposal is expected to be ratified by the shareholders at the company’s next annual general meeting.

In 2016, the carrier added nine new routes from its five operating hubs. In addition to its hubs in Sharjah and Ras al-Khaimah in the UAE, the airline operates a hub in Morocco, Egypt and Jordan.

It received seven new aircraft in 2016, bringing its active fleet to 46 Airbus A320 aircraft models.