Turbulence for region's airlines

Last year was a difficult time for Middle East airlines including Bahrain Air, which launched its services only in 2008. The airline, based in Manama, was forced to cut several routes, including its direct flight to Aleppo, Syria. And while demand for air travel is generally recovering around the world, the effects of the downturn are still being felt. Just two weeks ago, Bahrain Air temporarily suspended its services into Abu Dhabi and Kuwait.

"2009 was tough," admitted Ibrahim al Hamer, the managing director. "When we launched the airline we increased flights quickly to create a proper network out of Bahrain International Airport. But with the crisis, we had no other choice but to retract." While the privately owned airline did not disclose its financial performance - only reporting passenger traffic of 750,000 - many others have in a recent report that provides a detailed picture of the health of airlines in the MENA region.

The World Airline Report, which reveals large losses as well as pockets of profitability in areas as diverse as the UAE, Egypt and Tunisia, was published by Air Transport World magazine in conjunction with Ascend, the aviation data services company. The information was gleaned through intense research, contacting individual airlines, combined with Ascend's data. The report covers the results of the region's older, state-owned "legacy" airlines; its growing class of low-cost carriers; the globally ambitious "big three" of Emirates Airline, Qatar Airways and Etihad Airways; as well as several airlines in the process of rebranding.

Giovanni Bisignani, the director general and chief executive of the International Air Transport Association, described last year as "the worst year the industry has ever seen", including US$600 million (Dh2.2 billion) in losses in the MENA region, which analysts say was disproportionately affected by fears over the H1N1 virus. "We have permanently lost 2.5 years of growth in passenger markets and 3.5 years of growth in the freight business," he said.

While the region accounts for less than 3 per cent of global traffic, that is increasing as long-haul airlines reroute traffic over their Gulf hubs. The Gulf region included some profitable airlines, while Kuwait Airways, Jazeera Airways and Oman Air reported losses. Several other carriers are also believed to have been loss-making but did not disclose their results. In the Levant, airlines in Jordan and Lebanon announced profits, Syrian Arab Airlines did not participate in the survey, while Israel's two airlines announced declines in passenger figures.

In one bright spot, the airlines in North Africa that did report financial results generally posted healthy profits, such as EgyptAir. However, analysts say accounting standards vary widely in the Middle East and companies often lack transparency, particularly state-owned firms. In addition, some airlines own subsidiary firms in hospitality, transport - which are included in their airline results - or conducted asset sales or other exceptional items that contributed to their financial results.

"There are a lot of factors that could have had an effect last year, including the global downturn or fuel hedging," said Perry Flint, the associate publisher and editorial director of Air Transport World. "You may see some very large losses for airlines which are not totally reflective of their situation."