(MENAFN- Khaleej Times)Low-cost airline Air Arabia recorded on Wednesday a net profit of Dh237 million in the first half down by four per cent on the same 2014 period.
The Sharjah-based airline said the fall in net profit was "mainly driven by pressured yield margins due to market conditions as well as a number of strategic investments made by the airline in the first half of 2015 which will begin to fully deliver value in the near future." Net profit for the second quarter ending June 30 2015 dropped by 12 per cent to Dh152 million the airline said in a statement. The airline's turnover for the first six months reached Dh1.75 billion in line with the corresponding period of 2014. Turnover for the three months ending June 30 2015 stood at Dh860 million six per cent less than the same period of 2014. The airline said it flew 3.6 million passengers in the first six months of 2015 up nine per cent on the corresponding period of 2014. Passenger numbers in the three months ending June 30 2015 increased by four per cent to reach 1.8 million. The airline's average seat load factor - or passengers carried as a percentage of available seats - during the first half of 2015 stood at a high 79 per cent. "Air Arabia continues to deliver profit levels and strong passenger growth against a backdrop of challenging market conditions" said Shaikh Abdullah bin Mohammad Al Thani chairman of Air Arabia. "The first half of 2015 has seen Air Arabia taking major steps in investing in its growth. We have launched Air Arabia Jordan following the completion of a strategic acquisition as well as invested in new routes and capacity increase across the group's operating hubs which today provides our customer with access to over 115 routes across the world" said Shaikh Abdullah. He said the economic performance of Russia and CIS countries and the impact of oil prices on the global economy in addition to regional political instability have all served to put pressure on yield margins across the aviation sector. "We are confident that these factors are temporary and will be mitigated in the coming quarters when the long-term investments we have made into the business come fully on stream" he said. Air Arabia Jordan was launched in the first half of 2015 located at Queen Alia International Airport in Amman Jordan. Air Arabia Jordan was formed following the acquisition of a 49 per cent stake by Air Arabia in Petra Airlines. Its inaugural flight took off in May to Kuwait and it has since added services to Jeddah in Saudi Arabia Erbil in the Kurdistan Region of Iraq and Sharam El Sheikh in Egypt. Air Arabia said it had added 15 new routes to its network in the first half of 2015 including becoming the first low-cost airline from the Middle East and Africa to enter the Chinese market when it launched non-stop services to Urumqi the largest city in Western China. Saj Ahmad chief analyst at London-based StrategicAero Research told Khaleej Times that Air Arabia has produced strong results despite a four per cent decrease in profits versus the same period a year ago. "While the airline flew more passengers the increased competition largely from flydubai has seen pressure on yields" he said. Ahmad said the LCC (low cost carrier) market in the GCC is showing vibrancy as can be seen in the rise in passengers flown. "Air Arabia would be wise to consider launching operations from Dubai World Central - not to emulate flydubai but more to access larger markets and launch new routes. But before that the airline has to make a decision soon on whether it expands its fleet with more A320s or whether it selects the A320neo or 737MAX families for future needs" added Ahmad. -
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