Air Arabia posts full-year net loss as pandemic impacts passenger demand

Cost control and gradual resumption of flights helped company to earn Q4 profit and narrow net loss for 2020, chairman said

Air Arabia, the first and largest low cost carrier in the Middle East and North Africa, said the early measures it took to control overall cost while ensuring business continuity enabled it to post a profitable fourth quarter. Courtesy Air Arabia.Show less

Middle East budget carrier Air Arabia swung to an annual net loss in 2020, as the Covid-19 pandemic hurt passenger traffic.

The airline reported a net loss of Dh192 million in 2020, it said in a statement on Wednesday. That compared with a record profit of Dh1 billion in 2019.

Full-year revenue fell to Dh1.85bn last year, from Dh4.75bn in 2019, as it carried fewer passengers.

The airline served 4.4 million passengers in 2020 from its five hubs, compared to the 12 million passengers it served a year earlier before the pandemic.

Air Arabia recorded a net profit of Dh20m in the fourth quarter, a drop of 90 per cent from the same period a year ago. The airline attributed the profit to the early measures it took to rein in costs and ensure business continuity. Fourth-quarter revenue declined 53 per cent to Dh536m as it carried 1.2m passengers, 59 per cent fewer than the same quarter of 2019.

"The early measures taken by the management team to control overall cost and the gradual resumption of flights, albeit to a limited number of destinations, helped in achieving profits in the fourth quarter and in significantly reducing the net loss for the full year," Sheikh Abdullah Al Thani, chairman of Air Arabia, said.

The global aviation industry has been among the worst hit by the Covid-19 pandemic, which forced airlines to ground jets and seek government aid.

"Despite the strong start of the year in early 2020, the impact of the pandemic on the global aviation industry, which quickly materialised in airport closures and travel restrictions, forced airlines worldwide to battle the biggest challenge faced in the history of aviation," the chairman said.

"While the year 2021 continues to be a challenging one for the industry, we remain confident about the fundamentals of the aviation sector and the vital role air travel will continue to play in economic recovery."

The airline remains focused on adopting further measures to help improve the overall cost structure of the group and will continue to gradually resume operations where possible, he added.

Last year, Air Arabia Abu Dhabi, the UAE capital’s first low cost carrier, began operations from its base at Abu Dhabi International Airport.