Air Arabia profits soar as passengers fly on a budget

Rising demand for budget travel underpinned a 55 per cent rise in net profit last year for Air Arabia, the Middle East's largest low-cost carrier.

Rising demand for budget travel underpinned a 55 per cent rise in net profit last year for Air Arabia. Pawan Singh / The National
Powered by automated translation

Air Arabia's profits jumped by more than half to Dh425 million last year as it carried a record number of budget jet-setters.

The launch of new destinations to the former Soviet Union and the Arabian Gulf helped profit climb 55 per cent from Dh274m (US$74.6m) in 2011. Analysts polled by Bloomberg had forecast a 50 per cent net profit rise. The Middle East's largest low-cost carrier also said it was proposing paying a larger cash dividend of 7 per cent.

"With market conditions rebounding, the airline is fully confident in its ability to unlock opportunities for the low-cost model, which is pioneered by Air Arabia," said Sheikh Abdullah bin Mohammad Al Thani , the chairman of Air Arabia. The results cap a solid year for the Sharjah-based airline after it launched nine services, tapping into the UAE's growing ties with the former Soviet Union and the region. It started flights to Kazan, Rostov and Ufa in Russia; Odessa in Ukraine; Astana in Kazakhstan; Ta'if in Saudi Arabia; Salalah in Oman;and Erbil and Basra in Iraq.

Passenger numbers rose 13 per cent to more than 5.3 million. The carrier's seat load factor, or passengers carried as a percentage of available seats, reached 82 per cent. Air Arabia's fourth-quarter net profit rose 6 per cent to Dh83m, from Dh78m in the same period of the year before.

"As these results signify, Air Arabia continued to demonstrate its concerted efforts to enter into new markets and launch new ventures, while enabling more people to fly efficiently and affordably," said Sheikh Abdullah. Shares in the airline on the Dubai Financial Market rallied to their highest level in almost three years last Monday as investors' expectations rose about a bigger dividend payout. Last year it raised its 2011 payout to 6 fils a share from a proposed 4.5 fils.

This year's dividend distribution is equivalent to 7 fils a share. The payout was subject to approval by shareholders at the upcoming annual general meeting, it said yesterday. Air Arabia took delivery of six new Airbus A320s last year as part of an order for 44 placed in 2007. It is expected to receive another six new aircraft this year.

It operates to 82 destinations from its three regional hubs of Sharjah, Morocco and Egypt.