Air Arabia profit drops by a third

Tamsin Carlisle

• Last Updated: November 14. 2009 9:09PM UAE / November 14. 2009 5:09PM GMT

Air Arabia has posted a 33 per cent drop in third-quarter profit as it suffered from reduced travel during Ramadan.

The Sharjah-based budget airline yesterday reported net income of Dh143.5 million (US$39m) for the three months ending September 30 compared with Dh214.4m in the same period of last year. Revenue fell 12 per cent to Dh547.5m.

Air Arabia said passenger traffic in the third quarter was hurt by a seasonal contraction in travel during Ramadan, which was this year in September, amid concerns related to the swine flu virus and continuing fallout from the global financial downturn.

But the MENA region’s first no-frills air carrier and still its largest said its nine-month results demonstrated the long-term sustainability of its business model and the appeal of its low-cost services.

“At a time when the worldwide airline industry is projected to witness collective annual losses approaching $11bn, we are pleased to announce results for the first nine months of this year that continue to exceed expectations, demonstrating our positive performance amidst extremely challenging conditions,” said Adel Ali, the group chief executive of Air Arabia.

“While the challenges that lie ahead, especially in the short term, remain significant, we are convinced that Air Arabia will continue to serve as the preferred value-for-money choice for passengers seeking to travel in the Middle East North Africa, Europe and Asia.”

The airline reported a nine-month net profit of Dh336.6m, down 10 per cent from a year earlier, as revenue slipped 2 per cent to Dh1.47 billion. But it served 14 per cent more passengers during the period than in the first nine months of last year, and filled an average 79 per cent of its available seats.

Air Arabia has been using proceeds from its initial public offering of two years ago to finance regional expansion and has been franchising its brand across the Middle East.

Last month it launched Air Arabia Egypt, a joint venture with the Travco Group, which will fly to destinations in Europe, the Middle East and Africa. The move will add a third hub in Cairo to previously established bases in Sharjah and Casablanca.

Operations in Egypt are expected to begin early next year, Air Arabia said yesterday.

The airline’s latest financial results included unidentified “exceptional items”.

Without those, third-quarter profit would have fallen by 9 per cent, while nine-month profit would have risen by 6 per cent, it said.



tcarlisle@thenational.ae