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Air Arabia Q2 net profit down despite passenger increase

Air Arabia Q2 net profit down despite passenger increase

Airline blames regional shift in traffic and excess capacity for the decrease

Sharjah-headquartered low cost carrier Air Arabia has announced a 14 per cent year-on-year decrease in net profit for the second quarter of 2016 despite carrying 12 per cent more passengers.

The airline said net profit decreased to Dhs 131m driven by a regional shift in traffic due to the month of Ramadan and “excess in capacity available in the market which is affecting airlines’ yield margins”.

Similarly the airline recorded a 6 per cent decrease in net profit last year despite carrying more passengers.

Read: Air Arabia 2015 profit slides, passenger numbers increase

In September, CEO Adel Ali said Air Arabia could see a further impact on earnings from fuel hedges put in place prior to the steep drop in oil prices.

Read: UAE’s Air Arabia may see further impact from fuel hedging – CEO

Revenue for the quarter was up 4 per cent to Dhs 894m and Air Arabia carried more than two million passengers.

In its full H1 results, the airline said net profit was up 3.5 per cent from Dhs 237m in H1 2015 to Dhs 245m in H1 2016.

Revenue also increased 5.5 per cent from Dhs 1.75bn to Dhs 1.84bn and the airline carried 14 per cent more passengers during the half to 4.1 million.

Passengers carried as a percentage of available seats in the first half stood at 79 per cent.

“Despite the continuous pressure on yield margins that airlines are witnessing and the challenges associated with the regional economic outlook, Air Arabia continues to deliver solid financial performance and momentum growth,” said chairman Sheikh Abdullah Bin Mohamed Al Thani.

“We remain optimistic about the outlook of low-cost travel in the wider region as we continue to focus on further expanding our network and operational efficiency as well as leveraging on emerging travel trends by delivering even more value to our customers”.

The airline received three new planes in the first half and launched routes from Sharjah to Sarajevo, Amman to Riyadh, Marrakech to Pau and Fez to Toulouse.

Last week Air Arabia launched two weekly flights from Sharjah to the Georgian city of Batumi.

Read: Air Arabia launches new route to Georgia’s Batumi

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