Air Arabia 2015 profit slides, passenger numbers increase

Sharjah-based airline Air Arabia posted a 6 per cent decline in net profit for 2015 as it continued to feel the impact of fuel hedging contracts signed before the sharp dip in oil prices.

The low cost carrier said its net profit dropped from Dhs 566m in 2014 to Dhs 531m in 2015. This followed a 13 per cent decline in Q4 to Dhs 59m from Dhs 68m in Q4 of the previous year.

In September, CEO Adel Ali said that fuel hedging contracts put in place before oil prices began their decline in 2014 would impact the carrier’s results for the next two quarters.

Crude prices have declined further since then to below $35 a barrel, a 70 per cent drop since Q4 2014.

The carrier’s turnover for the year was up 3 per cent to Dhs 3.8bn and the airline carried more than 7.6 million passengers last year, a 12 per cent increase on 2014. Seat load factor stood at 79 per cent for the year.

Air Arabia’s board proposed a dividend distribution of 9 per cent of share capital, equivalent to 9 fils per share.

“2015 was a year of growth and achievement for Air Arabia as our expansion strategy, efficient operations and tight cost controls reinforced our market leading position,” said chairman Sheikh Abdullah Bin Mohammad Al Thani. “The impact of low oil prices continues to have its effect on the wider global economy, while pressure on yields and geo-political uncertainty continued to weigh on the aviation industry. Despite these challenges, Air Arabia once again delivered a strong set of numbers and remains well positioned for further growth in 2016.”

The airline said it added 23 routes last year including a regular non-stop service to Urumqi, China. It also launched a loyalty programme dubbed Airewards.