Flydubai reported a 60 per cent drop in net profit in 2015, as the strong US dollar and a challenging trade environment weighed on earnings.
The low-cost carrier yesterday reported Dh100.7 million of profit in 2015, compared to Dh250m a year earlier. It generated Dh4.9 billion in revenues, reflecting an increase of 11 per cent over 2014. During the year flydubai carried 9.04 million passengers, an increase of 25 per cent over 2014.
“The overall trading environment has remained challenging, but we have maintained our growth story and ended the year positively,” said Ghaith Al Ghaith, the flydubai chief executive.
Revenue passenger kilometres, a measure calculated by multiplying the number of revenue-paying passengers by the distance travelled, was “under pressure”, the airline said. This was owing to a stronger dollar, a challenging trading environment and the suspension of flights on some routes.
During the first half of 2015, flydubai reported a loss of Dh147.4m on the back of lower Russian demand and the suspension of flights to Iraq, Yemen and parts of Ukraine. Yet it turned around its performance in the second half of the year helped by lower fuel prices and efforts to manage costs.
“Flydubai’s 2015 performance managed to not only turn around losses that had been seen in the first half of the year, but it also managed to sharply increase revenues by over 11 per cent compared to the previous year,” said Saj Ahmad, the chief analyst at StrategicAero Research.
As the price of crude oil slumped from US$114 per barrel almost two years ago to about $30 per barrel, flydubai, like other carriers, has benefited from the fuel discount.
Fuel costs fell to 30.3 per cent of its operating costs, with 59 per cent of fuel costs unhedged. Currently 16 per cent of flydubai’s fuel requirements are hedged for the coming 24 months.
The airline said this would provide a certain level of control on its fuel costs.
The carrier will start to receive 16 new aircraft from May phased over the following two years.
It also plans to retire seven aircraft to maintain a young fleet. Currently the discount carrier flies to 89 destinations in 43 countries.
“Our network is maturing and so we continue to monitor capacity and review the opportunities for existing routes as well as for new routes,” said Mr Ghaith.
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