Air Arabia swings to profit in second quarter despite pandemic

UAE-listed airline remains 'optimistic' that relaxed travel restrictions and resumption of operations will propel industry's recovery

Middle East budget airline Air Arabia had a profitable second quarter even as Covid-19 continues to affect the aviation industry. Courtesy Air Arabia

Middle East budget airline Air Arabia swung to a quarterly profit as revenue more than quadrupled and passenger traffic increased across its five bases amid a gradual recovery in air travel from the Covid-19 pandemic.

The airline posted a Dh10 million ($2.72m) net profit in the three months to June 30, compared with a Dh239m loss in the same period a year earlier, Air Arabia said on Monday. Quarterly revenue was up 313 per cent to Dh496m.

"While flights' resumption compared to pre-pandemic are still subject to many restrictions, the second quarter of 2021 witnessed gradual improvement in comparison to same quarter last year, which was heavily [affected] by the subsequent cancellation of scheduled flight operations," Sheikh Abdullah bin Mohamed Al Thani, chairman of Air Arabia, said.

This is the third consecutive profitable quarter that the company registered since the pandemic hit.

"We remain optimistic that the gradual ease on travel restrictions and resumption of operations will continue to help the industry in its path to recovery," Sheikh Abdullah said.

In the first half of the year, Air Arabia reported a net profit of Dh44m for the six months ending June 30, compared to a net loss of Dh169m in the same period in 2020.

In the first six months of 2021 the airline posted a turnover of Dh1 billion, a 5 per cent increase compared to the corresponding period last year, Air Arabia said.

“Air Arabia’s ability to post a profitable first half 2021, despite the continued [effects] of the Covid-19 pandemic on the aviation industry worldwide, is a direct result of the cost-control measures adopted by the management team and supported by the gradual resumption of operations witnessed in the first half," Sheikh Abdullah said.

More than 2.3 million passengers flew with Air Arabia between January and June this year across the airline’s five bases, down from 2.48 million passengers from four hubs in the first half of 2020.

Air Arabia’s average seat load factor – passengers carried as a percentage of available seats – during the first six months of 2021 stood at 73 per cent on average.

The Dubai Financial Market-listed airline expanded its route network in the first half of the year by launching new flights from its bases in the UAE and Egypt.

"Summer has seen good progress. July and August have been very promising," Adel Ali, Air Arabia group chief executive, told Bloomberg TV in an interview on Tuesday.

"Flights are full, wherever it has not been blocked or complicated by various airports around the world people want to get to."

Mr Ali said he is "now more optimistic" as people adapt to the Covid-19 pandemic and there is pent-up demand to travel more.

"I am feeling good at the moment about the future and let us hope we don't get more surprises," he said.

In July, Air Arabia Group signed an agreement with the Armenian National Interests Fund to launch Armenia’s new national airline. The Sharjah-based group will hold a 49 per cent stake in the joint venture airline and will manage the business, Mr Ali said.

The Armenian budget airline, which will begin operations in the summer of 2022, will lease aircraft to "close the gap" until Air Arabia receives its order of 120 Airbus narrow-body jets in 2024, he said.

Air Arabia has advertised for jobs at the Armenian venture – including for cabin crew, pilots and administrative positions – and has hired staff in other hubs after the pandemic-induced slowdown in air travel forced the airline to cut its workforce.

"We have brought in quite a lot of people already that we needed to gear up for the current business we have in the UAE, Morocco and Egypt," Mr Ali said.

Meanwhile, Air Arabia Abu Dhabi, a joint venture between Air Arabia and Etihad Airways, plans to expand its fleet to 20 Airbus aircraft over the next five years amid optimism about future growth once air travel restrictions are eased, Mr Ali told The National in an interview in June.

The airline, which currently operates three Airbus A320s in the UAE capital, also expects annual passenger traffic to initially grow by 20 per cent to 25 per cent over the same period, he said at the time.