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UAE’s Air Arabia Q2 profit falls 44 percent
Earnings miss most analyst forecasts.
August 8, 2010 3:21 by Reuters
UAE-based budget carrier Air Arabia said on Sunday net profit for the second-quarter fell 44 percent, hit by declining yields hurting airlines globally and higher fuel prices and falling short of most analysts forecasts.
Air Arabia made a net profit of 50 million dirhams ($13.61 million), down from 90 million dirhams in the second quarter of 2009, the company said in a statement.
Turnover increased by 6 percent to 485 million dirhams, while passenger numbers were up 11 percent to 1.1 million in the period, it said. Average seat load factor, an industry benchmark, increased by 4 percent to 82 percent, against the year-ago period.
“This decline in profitability was in line with global industry performance, which continues to be impacted by changing market dynamics, characterised by increase in fuel costs and continuous pressure on yield margins,” it said.
Analysts expected a profit of 43 million to 91 million dirhams in a Reuters survey in July.
The Arab world’s largest listed airline, set up in 2003 in Sharjah in the UAE, has a hub in Morocco and recently launched operations in its third hub in Egypt. The carrier is focused on further expansion, it said.
Air Arabia services 65 routes across Europe, the Middle East, Africa and Asia from its three hubs.
The airline announced in June the launch of Jordan’s first low-cost carrier, to serve as its fourth regional hub, as part of its expansion plans.
Air Arabia is under pressure from rivals including Kuwait’s Jazeera Airways and Dubai-owned FlyDubai, but also from bigger carriers such as Emirates trying to cope with a drop in international passenger travel.
Air Arabia shares closed unchanged earlier on Sunday, outperforming Dubai’s bourse which fell 1.6 percent.
(Reporting by Tamara Walid; Editing by Jason Benham and Jason Neely)