Flydubai expects its annual profit in 2023 to beat last year's levels, following its busiest summer travel period on record, but warned of headwinds from high oil prices and delays in aircraft deliveries.
The sister airline of Emirates airline registered a record full-year profit of Dh1.2 billion ($327 million) in 2022, a 43 per cent surge on 2021.
“We expect this year to be better than last year, but it all depends on the second half of 2023, especially with regards to fuel prices because the increase is quite significant and hit us by surprise,” Ghaith Al Ghaith, flydubai's chief executive, said on Tuesday.
The airline's fuel bill makes up more than 25 per cent of its total cost, according to the official.
Flydubai had a bumper summer when it carried more than four million passengers between June and mid-September this year, up 30 per cent on the same period of 2022, Mr Al Ghaith said.
It operated 32,000 flights across a network of 120 destinations in 52 countries, a 22 per cent increase on the number of flights during the same period last year.
“This is probably the busiest summer in terms of the number of passengers and flights in the history of flydubai,” he said, citing the attraction of the UAE as a tourism and business destination.
The airline also expects a “bumper” winter as the UAE remains busy year-round with attractions and business events, including the Cop28 climate change summit hosted by Dubai in November.
“The whole year could be better as we, like many others in the industry, suffer delays in receiving aircraft and that has affected performance … it's not only to do with aircraft manufacturers but the whole supply chain.”
The global aviation industry has been grappling with continuing disruptions in its supply chain since the Covid-19 pandemic, resulting in rising costs, delivery delays and production snags.
The airline boss expects these supply chain woes to continue into 2024, with delays spanning aviation suppliers from seat manufacturers to aircraft galley-makers.
The all-Boeing fleet operator, which was scheduled to take delivery of 17 Boeing 737 Max 8 jets this year, has received just seven of these aircraft and expects further delays to the remaining handovers.
Of the remaining aircraft to be delivered this year, “if we get four, we will be lucky”, Mr Al Ghaith said.
“We're in constant discussion with Boeing, we are trying to solve this problem as much as possible, but it's a big issue,” he said.
To mitigate the problem, flydubai has leased additional aircraft and plans to extend the lease on other aircraft that are nearing the end of their rental period.
Continuing talks for new jet order
The low-cost airline remains in discussions with aircraft manufacturers for a new plane order to fulfil its fleet requirements for growth and replacement in the next phase of its expansion.
“We are extremely interested in making further acquisitions of aircraft,” Mr Al Ghaith said.
The talks are not yet at a “mature level” to guarantee an announcement at the biennial Dubai Airshow in November when plane makers will vie to score the highest number of commercial jet deals.
The decision is being affected by the “availability of aircraft at the right time” and “complications from different suppliers”, Mr Al Ghaith said.
“But it could happen still, so watch out for that,” he added.
Airlines around the world are clamouring for new aircraft to grow and replace their fleets to meet the boom in demand for air travel.
As it ramps up its operations to meet this surge in demand, flydubai has hired 800 employees this year and will continue its employment drive with plans to add another 200 to 300 staff this year, Mr Al Ghaith said.
The airline's workforce currently stands at 5,300 people.
The carrier recently announced the launch of operations to three new destinations. Its daily service to Cairo starts on October 28, Poznan in Poland begins on October 29 and Mombasa is scheduled to join the network from January 17, 2024.
Mr Al Ghaith sees more “underserved” routes in Africa and joined a growing chorus of UAE airline executives in calling for an open sky agreement between the UAE and India.
The India-Middle-East-Europe Economic Corridor, which was announced during the G20 summit in New Delhi this month, features a multibillion-dollar rail and shipping link.
“With [this] partnership to create a corridor of trade, aviation should also be liberated – if that happens then the potential is endless. India has the highest potential in the world to attract more tourism,” Mr Al Ghaith said.
