Cost controls boost Air Arabia's profit as route network expands

Dubai: Tight cost controls saw Air Arabia's net profit inching up seven per cent in the fourth quarter of 2011 to Dh78.7 million against Dh73.6 million in the same period a year earlier, the budget carrier said yesterday in a statement.

The Sharjah-based airline's turnover went up 17 per cent to Dh638 million against Dh544.8 million in the fourth quarter of 2010.

The solid financial results were due to the carrier's excellent cost controls and appealing product offering, Shaikh Abdullah Bin Mohammad Al Thani, Air Arabia's chairman, said in the statement.

The airline said its net profit for the full year was Dh274 million and turnover rose 16 per cent to Dh2.4 billion. It added six destinations to its network.

The Dubai Financial Market-listed airline said its board of directors proposed a dividend distribution of 4.5 per cent of capital, equivalent to 4.5 fils per share, subject to ratification by the shareholders of Air Arabia at the company's upcoming annual general meeting.

Operational efficiency

"While these challenging market conditions continue to impact the performance of the aviation sector here in the Middle East and worldwide, we have focused more keenly than ever on ensuring the highest level of operational efficiency," Shaikh Abdullah said.

Air Arabia carried 4.7 million passengers in 2011 and took delivery of six new Airbus A320 aircraft. It is due to take delivery of another six this year, from its total order of 44 planes.

Serving around 70 routes from its three hubs in the UAE, Morocco and Egypt, Air Arabia's 2011 seat load factor was 82 per cent.

"As the first low-cost airline in the GCC, its huge footprint, coupled with bases in Morocco and Egypt have helped to offset demand fluctuations seen in Egypt last spring, while deliveries of new planes have helped to push fuel bills down whilst continuing to add new destinations to its network," Saj Ahmad, chief analyst at Strategic-Aero Research, told Gulf News.

"It should also be noted that the carrier will also opt for the new fuel-efficient A320neo during the year.

"Whether these comprise a new order or a lease deal from Kuwaiti lessor Alafco is not yet clear, but if the carrier aims to stay in the top two alongside flydubai, it will have to invest in new airplanes before the year is out or risk losing slots at Airbus for future deliveries and growth," he added.

Air Arabia deferred plans to establish its fourth hub in Jordan owing to the geo-political tensions in the region and high fuel prices.

New hangar facility

Meanwhile, the final quarter of 2011 saw Air Arabia inaugurating its aircraft hangar facility and multimillion-dollar flight simulator at Sharjah International Airport, in addition to its Centro Sharjah Hotel.

"Moving ahead, we look forward to providing our customers with even more value-for-money options in 2012, as well as an even wider range of services and destinations," Shaikh Abdullah said.

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