Profits down for UAE airline

06 August 2015

Market conditions and investments exerted downward pressure to profits compared with 2014

  • Lower oil prices and political instability hit Air Arabia’s fiscal performance
  • Key investment includes stakes acquisition of Jordan’s Petra Air
  • Correction in fiscal performance expected in coming quarters

Sharjah-headquartered Air Arabia posted $64m in net profit during the first six months of 2015.

This figure is 4 per cent lower than the net profit recorded a year earlier, in spite of the number of passengers flown by the airline rising by 9 per cent compared with the corresponding period last year.

The low-cost carrier attributed its weaker performance this year to pressured yield margins resulting from tough market conditions and strategic investments made during the year.

A key part of these investments is the firm’s acquisition of a 49 per cent stake in Jordan’s Petra Air, which has since been rebranded as Air Arabia Jordan.

Air Arabia chairman Abdullah bin Mohammad al-Thani said in a statement that the economic performance from Russia and Commonwealth of Independent States countries and the impact of oil prices on the global economy in addition to regional political instability have all served to put pressure on yield margins across the entire aviation sector.

“We are confident that these factors are temporary and will be mitigated in the coming quarters when the long-term investments we have made into the business come fully on stream,” he said.

On the upside, the airline’s seat load factor during the first half of the year is at 79 per cent. Seat load factor is the number of passengers carried as a percentage of available seats.

The carrier reported a double-digit profit rise during the first quarter of the year.

Stay informed with the latest in the Middle East
Download the MEED app today, available on Apple and Android devices

 

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.