Despite 'challenging' year, Air Arabia outperforms analysts' expectations as it prepares to open its third hub in Egypt this year.
Air Arabia's quarterly profit falls, but beats forecasts
Air Arabia, the low-cost carrier based in Sharjah, flew past most analysts' profit expectations for the latest quarter even as it reported double-digit declines for both the three months and the full year. As the heavy weather continued for the airline industry, the carrier said its net profit fell 15.2 per cent in the fourth quarter of last year and by 11.3 per cent, by Reuters' calculations, for the latest year.
"The previous 12 months represented one of the most challenging periods in the history of the global aviation sector, as pressure on yields increased significantly as a consequence of the worldwide financial crisis," said Sheikh Abdullah bin Mohammad Al Thani, the chairman of Air Arabia. "The associated overcapacity in the sector led to collective losses of roughly US$11 billion (Dh40.4bn) for all global airlines, demonstrating the depth of the challenges facing our industry."
Air Arabia's quarterly profit was Dh115.4 million, according to calculations by Reuters, down from Dh136m in the same period last year. Analysts polled by Reuters expected on average that Air Arabia would post a fourth-quarter profit of Dh106.8m. Air Arabia said its net profit for the latest year was Dh452m. Turnover last year fell 4.5 per cent to Dh2bn, it said, but passenger traffic grew 14.2 per cent to 4.1 million passengers. Its average seat load factor, or the number of passengers carried as a percentage of available seats, was 80 per cent.
Air Arabia faces growing competition in the Gulf from other low-cost airlines, including Jazeera Airways, based in Kuwait, and flydubai. Air Arabia was launched in 2003 and today serves 59 destinations from two hubs, in the UAE and Morocco. Last year, it announced the signing of a joint venture with Travco Group to launch a new low-cost carrier based in Egypt, serving Europe, the Middle East and Africa, and representing the carrier's third hub. Operations for the Egypt hub are expected to begin in the first half of this year.
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