Air Arabia registers 272% profit surge

Air Arabia, the Middle East’s biggest low-cost airline, said fourth-quarter profit almost tripled after it carried more passengers and added destinations, while full-year profits increased by 272 per cent.

Around 2.7 million passengers flew with Air Arabia in 2007, which is 53 per cent higher than 2006. Its net income in the three months to December 31 surged to Dh89.5m from Dh32.7m in the year-earlier period.

The number of passengers rose almost 50 per cent to 745,000 in the final three months of 2007, pushing revenue up 62 per cent to Dh349m. “The economy is good, demand is good,” said CEO Adel Ali.

“In this region of oil producing countries, high oil prices are more positive as it generates a strong economy, and makes people travel,” Ali said.

Oil prices have more than quadrupled during the last six years, spurring economies of the Gulf, the world’s biggest oil-exporting region. This has attracted workers from around the world, especially South Asia, the Middle East and the Philippines. Routes to India, Egypt and Syria led income in the fourth quarter,” Ali said.

The airline, whose stock has almost doubled since it sold shares in an initial public offering last year, will probably carry 25 to 30 per cent more passengers this year as it expands its fleet from 11 aircraft to 14, and adds destinations in India and the Middle East. The CEO declined to be more specific.

Air Arabia flies to 37 destinations in the region, South and Central Asia, and North Africa. “We hope in 2008 we will have a similar load factor to last year,” Ali said.

In a survey in December, Deutsche Bank and EFG-Hermes respectively forecast Air Arabia would make a profit of Dh86m and Dh96m. Last month, the airline agreed to create a low-cost airline venture with Nepal’s Yeti Airlines using Kathmandu as a hub for flights to India and Malaysia.

Using the aircraft it has bought from Airbus, Air Arabia plans to expand its fleet to more than 50 by 2015.

Kuwait’s Jazeera Airways is the only other listed airline in the Gulf. Citigroup Inc last month started coverage of Air Arabia with a “buy” recommendation. (Reuters)