Air Arabia expects a ‘good summer’ ahead, CEO says

Airline does not need financial support but has asked the UAE government to back it should the need arise

High altitude view of the earth.  A slight curvature can be seen on the horizon.
Powered by automated translation

Air Arabia, the UAE’s only listed airline, is optimistic about a revival of travel demand during the summer as more people receive the Covid-19 vaccine and border restrictions are eased.

“I expect a good summer, subject to we do not get hit with surprises of a third wave or something of that nature,” said group chief executive Adel Ali on the sidelines of the Arab Aviation conference in Ras Al Khaimah on Monday.

“As vaccines take place, as more airports are opening, I expect more people to want to travel.”

Government-imposed travel restrictions have affected the recovery of the global aviation industry, prompting airlines to call for Covid-19 tests and vaccines in place of quarantine measures.

“The real question is not about demand or airlines or people going on holiday; it is whether airports will open up and whether the safety protocol will not be as tough as it has been in some countries,” said Mr Ali.

“Of course, people will not go on holidays if they have got to quarantine for two weeks. If it is open, they will.”

The recovery of the region's travel sector will be driven by tourism and people visiting family and friends, he said. However, the business travel will take longer to rebound.

Short-haul flights are expected to recover faster as travellers become more confident.

Mr Ali said it remains unclear at this stage whether the airline will swing to profitability this year.

Air Arabia posted a net loss of Dh192 million in 2020, despite a net profit of Dh20m in the fourth quarter.

“What I am confident about is that we are doing extremely well under the circumstances. I think we have restructured and have driven a lot of cost out of the business,” he said.

“We are comfortable as a business that we can go through this pandemic for as long as it takes, and we will get out of it in a strong position.”

The airline does not have plans to raise debt . However, it is holding discussions with the UAE government.

“A request was put in for support if need be. That need be has not happened yet. The company is doing well,” he said.

“The dialogue continues to happen. At the moment, there is no point in going for loans or seeking financial support when the company is in good shape.”

The airline, which operates Airbus planes only, does not have plans to restructure its aircraft orders or schedule of deliveries, said Mr Ali.

It will take delivery of one Airbus A321neo jet in April. Deliveries for a $14 billion order of 120 Airbus aircraft are set to begin in 2024.