Air Arabia to report Dh307m accumulated loss for Abraaj exposure
The Sharjah airline posted a Dh26m net profit in the fourth quarter of last year
Air Arabia will report Dh307 million in accumulated loss related to its dealings with the embattled private equity firm, which is undergoing a court-supervised restructure.
The airline in June disclosed it had an exposure of $336m to Abraaj through funds and short-term loans, making it one of the companies with the biggest exposure to the group.
"The carrier will report an accumulated loss of Dh307m, subject to ratification by Air Arabia shareholders at the company’s upcoming Annual General Meeting," the company said in a statement on Wednesday.
"While Air Arabia’s liquidity status and profitable operations remain intact, this step aims to serve the best interests of the company and its investors."
The low-cost airline said in January it had started legal proceedings against Abraaj founder Arif Naqvi through filing a misdemeanour case in a Sharjah court. The airline's legal move follows arbitration proceedings it undertook in July. Abraaj is undergoing a court-supervised restructure and is trying to sell off parts of the business to repay its debt.
"Not withstanding this accounting treatment, Air Arabia Group is actively seeking to maximise the realisation of this investment and remains fully engaged with the JPLs [Abraaj's joint provisional liquidators] and stakeholders involved in the matter while the legal proceedings taken by Air Arabia and the ongoing court-supervised restructuring of Abraaj continues," the company added in the statement on Wednesday.
Air Arabia posted in the fourth quarter of last year a net profit of Dh26m "in line" with its profit in the year earlier period, it said on Wednesday, without providing figures for the fourth quarter of 2017. Turnover rose 20 per cent to Dh1 billion during the fourth quarter.
Air Arabia flew 2.1 million passengers in the fourth quarter, a 5 per cent increase from the year-earlier period.
Global airlines profit are expected to rise to $35.5bn in 2019 from $32.3bn in 2018, boosted by lower jet-fuel bills and growing economies, the International Air Transport Association said in December.
Air Arabia is planning to expand its fleet to more than 100 planes by 2025, from 60 currently, as it increases its operations across the Middle East, Africa and Asia, its chief executive Adel Ali told The National in October.
The Dubai-listed company is in talks with manufacturers including Boeing, Airbus and Embraer to purchase new aircraft to replace and grow its Airbus-only fleet, with a view to place an order before the end of 2019, he said.
Updated: February 14, 2019 01:17 PM