Fat bank balance earning Air Arabia profits
As the low cost carrier gets set to start a new joint venture airline, its statement reveals that it is making more money from its bank account than its operations.
August 14, 2008 9:04 by kippreport
More than 50 per cent of the first-half net earnings of Air Arabia have been contributed by the profit accumulated from its bank deposits, the company’s statement of income has revealed.
The first listed low-cost carrier in the Middle East and North Africa, Air Arabia posted a net profit of around $43m for the first half of the current year. And the share of operating profit in that was only around $21m, whereas the profit from bank deposits was half a million dollars higher.
The biggest chunk in the company’s bank balances is in the form of fixed deposits which amount to more than $450m .The current bank balances and cash are far less compared to six months ago.
While the total revenue of the airline for the second quarter of the current year was around $133m, the net profit for the same period reached approximately $22m.
The company, which went public with a $680m IPO in March last year, has also entered into a joint venture agreement for an airline that will operate from Morocco. The launch date is yet to be announced.
The company has also entered into a contract with Airbus SAS for the purchase of 44 aircraft, valued at approximately $3.6b.
Air Arabia recently signed a joint venture agreement with Hong Kong Aircraft Engineering Company (HAECO) to meet the airline’s engineering and maintenance requirements. The new 51:49 joint venture company will be known as HAECO Sharjah Aircraft Maintenance Company and will be based in Sharjah.
First seen in The Business Weekly.