Fuel costs, unrest hit UAE’s Air Arabia Q3 profits
Airline says Q3 net profit 99.3 mln dirhams; Co says Q3 revenue 690.9 million dirhams; Challenging market conditions continue - chairman
November 1, 2011 3:44 by Reuters
UAE budget carrier Air Arabia reported a 27 percent drop in third-quarter net profit, as disruptions due to regional political unrest and soaring fuel costs hit earnings.
Air Arabia earned net profit of 99.3 million dirhams ($27 million) compared with 135.17 million dirhams in the prior-year period, the company said in a statement.
Two analysts forecast average profit of 105.15 million dirhams in a Reuters survey.
“The challenging markets conditions we have seen in the second quarter of this year continued in the third quarter, with a further escalation in the political turmoil in several countries and an upward trend in the average fuel bill,” Sheikh Abdullah Bin Mohammed Al Thani, chairman of Air Arabia said in a email statement.
The airline, which hedges its fuel costs, said it booked expenses of 24.8 million dirhams in the quarter, related to oil price fluctuations and losses from investments in associates.
Revenues for the third-quarter rose to 690.8 million dirhams from 568 million dirhams last year, the carrier said.
Middle East carriers are slowly recovering from the impact of regional unrest in countries like Egypt, Libya, Syria, Bahrain and Tunisia which forced them to cancel flights and delay growth plans.
Air Arabia, headquartered in the emirate of Sharjah, also has hubs in Egypt and Morocco.
The airline, which competes with regional low cost carriers such as flydubai and Kuwait’s Jazeera Airways , delayed plans to establish a fourth hub in Jordan earlier this year.
The carrier crossed the 20-million passenger mark in the third quarter and took delivery of two new Airbus A320 aircraft from Airbus, it said.
The airline’s shares closed 0.5 percent lower on the Dubai index on Tuesday before the announcement. ($1 = 3.673 UAE Dirhams) (Reporting by Praveen Menon; Editing by)