Air Arabia delivers strong 2016 net profit of AED 509 million

Polly Coleman
- Finance - Feb 14, 2017

As the Middle East and North Africa’s first and largest low-cost carrier continued to deliver healthy growth and strong levels of profitability, Air Arabia (PJSC) has announced strong full-year financial results for 2016, despite challenging market conditions.

The airline’s net profit for the full year (ending December 31st, 2016) was AED 509 million. This is 4 percent lower than the 2015 figure of AED 531 million. Turnover for the full year 2016 was in line with the preceding 12 months reaching AED 3.8 billion. More than 8.4 million passengers flew with Air Arabia in 2016, which was a 12 percent year-on-year increase. The average seat load factor (or passengers carried as a percentage of available seats) in 2016 stood at an impressive 79 percent.

After its solid full year 2016 performance, Air Arabia’s Board of Directors proposed a dividend distribution of 7 percent of share capital, which is equivalent to 7 fils per share. This proposal was made following a meeting of the board of directors of Air Arabia and is subject to ratification by Air Arabia’s shareholders at the company’s upcoming Annual General Meeting.

In 2016, Air Arabia added 9 new routes to its global network. The carrier took delivery of 7 new aircraft and ended the year with a fleet of 46 Airbus A320 aircraft operating to 124 routes across the Middle East, Africa, Asia and Europe.

Sheikh Abdullah Bin Mohammad Al Thani (Chairman of Air Arabia) said: “2016 was a challenging year for the global aviation market as the economic and political uncertainty continued to impact the industry. We have seen vigilant fiscal markets, weakening currencies and political instability impacting airlines performance. Despite all challenges, Air Arabia recorded solid full year results driven by growth, efficient operations and tight cost controls.”

In the fourth quarter of 2016, Air Arabia reported a net loss of AED 33 million, despite maintaining a strong average seat load factor of 80 percent. Turnover for the three months (ending December 31st 2016) was AED 814 million. This was a drop of 15 percent compared to AED 956 million from the same period in 2015. Air Arabia flew 2.1 million passengers in the final quarter of 2016 which was an increase of 6 percent from the corresponding 2015 figure.

Sheikh Abdullah Bin Mohammad Al Thani continued: “The fourth quarter of 2016 was impacted by deteriorating yield margins that the industry in general and the Middle East region in particular is witnessing. The solid operating metrics and high seat load factor that Air Arabia achieved in the fourth quarter were impacted by continuous drop in yield margins as a result of the overcapacity deployed in the market and the slow growth environment in major economic hubs. As the market conditions continue to be challenging, Air Arabia will continue to drive its business by a clear strategy for organic growth and supported by strong measures to continue driving operating expenses lower. Above all, we will remain focused on delivering innovative value driven services to our customers allowing them to travel more often to more places.”

Air Arabia was ranked 3rd among the top 50 airlines in the world in 2016 by Airfinance Journal. The airline was also named the ‘Best Low-cost Airline serving the Middle East’ at the Business Traveller Middle East 2016 Awards as well as being awarded ‘Best Value Leisure Product Award’ at Travel Trade Fair Pune in India. The airlines CEO was also named ‘Airline CEO of the Year’ at the prestigious CEO Middle East Awards 2016.  The airlines corporate social responsibility program ‘Charity Cloud’ was also recognized last year by winning the ‘Initiative of the Year’ award.

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