Low cost airline pioneer's revenues take off
Despite regional challenges, Air Arabia posted an impressive growth in revenue for the first nine months of the year. (Image credit: Shutterstock)
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Khaleej Times reports that Air Arabia on Monday declared 14 per cent growth in its nine-month revenues despite continued political instability in regional travel market.
The first and largest low-cost carrier in the Middle East and North Africa (Mena) said its nine-month revenues rose to Dh2.3 billion from Dh2 billion in the same period last year. The nine-month net profits stood at Dh341 million.
The low-cost pioneer in Mena region registered a 15 per cent increase in passenger traffic to 4.5 million during January-September period. The average seat load factor — or passengers carried as a percentage of available seats — for the same quarter stood at an impressive 81 per cent.
“Air Arabia is pleased to announce yet another nine months of solid financial performance, achieved despite the continued political instability affecting the regional travel market,” said Shaikh Abdullah bin Mohammed Al Thani, Chairman of Air Arabia.
The Sharjah-based airline said its third-quarter net profit fell nine per cent from Dh226 million to Dh206 million. It attributed the decline in third-quarter profits to travel seasonality with the month of Ramadan having occurred in July-August this year.
The carrier’s turnover for the third quarter reached at Dh854 million, an increase of six per cent as compared to Dh804 million in the same period of last year. It carried 1.5 million passengers in the third quarter of 2013, an increase of 11 per cent compared to the same period of last year.
Adel Ali, Group Chief Executive Officer of Air Arabia, said the airline would continue to demonstrate its long-term sustainability of its business model and appeal of its low-cost services.
“It has been a very tough year. We continue to face some challenges due to political instability in the region, decline in Indian rupee and Turkish lira, however despite all that we have grown in passenger numbers and increased frequencies and the numbers look good,” Ali told Khaleej Times.
In reply to a question about the 2014 outlook, he said the airline is expected to continue to perform better despite some challenges.
“We expect that 2014 should be a maturing year and the growth will continue,” he said.
“The UAE has a very stable environment in the region. Tourism and businesses will continue to grow while oil prices are expected to be stable,” he explained.
In the third quarter of 2013, Air Arabia took delivery of two A320 aircraft from Airbus, and expects additional delivery of two before the end of the year. Air Arabia, which commenced operations in October 2003 and currently operates a total fleet of 34 new Airbus A320 aircraft, is serving 87 routes from three hubs in UAE, Morocco and Egypt.
“These results show a strong growth in passenger numbers, underscoring the robustness of the low cost market in the GCC,” Saj Ahmad, chief analyst at London-based StrategicAero Research, told Khaleej Times.
“This has provided Air Arabia with a 14 percent rise in earnings for the last three quarters and demonstrates the continued demand that exists for low cost, no frills travel — this is despite the continued difficulties seen in Egypt, Libya and Syria.
And with a load factor of around 81 per cent, it is clear that Sharjah and Air Arabia are harnessing the strength of their less congested airport to allow this growth to flourish,” he said.
Air Arabia also launched operations to Hail in Saudi Arabia, and Lar and Mashhad in Iran during the July-September quarter. The airline is expected to announce one more destination in Saudi Arabia before the end of this year that will bring the total destinations to 88.
In the first half of 2013, Air Arabia added five new routes from Sharjah, These new destinations include: Sialkot in Pakistan; Baghdad in Iraq; Abha and Hail in Saudi Arabia; and Yerevan in Armenia. The first half of 2013 also saw the airline increasing frequency of flights to Beirut in Lebanon, Salalah in Oman, and Dhaka in Bangladesh.
Shaikh Abdullah said: “Air Arabia’s robust financial performance, a function of our high seat load factor and operational excellence, further reflects the airline’s continued focus on generating profitable growth through innovation and excellent services.”
“As we mark our 10th anniversary, we will increasingly focus on our business expansion strategy, whilst continuing to introduce innovative low-cost travel solutions that have benefitted nearly 40 million passengers that we have served since inception. I look forward to reporting another period of growth and value for all our stakeholders at the year end,” he said.
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