Air Arabia posts profit in second quarter

Air Arabia posted net profit of Dh51 million in the second quarter of 2011, up two per cent from Dh50 million in the corresponding quarter last year, on high passenger traffic, the low cost carrier said Wednesday in a statement. The Sharjah-based airline said it carried 1.16 million passengers in second quarter of 2011, marking a five per cent increase from 1.10 passengers in the same period last year, while maintaining the load factor of 82.5 per cent in the period April to June 2011. While the two per cent increase in Q2 net profit exceeded analyst estimates, Kareem Murad, senior vice-president at Shuaa Capital, said, he expects the carrier to perform "much better" in the next quarter. "The third quarter is generally the strongest one given the fact it follows summer holidays and peak travel period. So the higher hotel occupancies and stronger travel trends will bode well for Air Arabia in the third quarter," he told Gulf News. Meanwhile, with turnover up 22 per cent to reach Dh592 million from Dh485 million in the same period a year earlier, Air Arabia said it displayed steady growth in profit, revenue and passenger traffic. Article continues below Further, the second quarter of this year saw fuel price averaging to "46 per cent" increase in the market fuel bill compared to same quarter of correspondent year, according to Shaikh Abdullah Bin Mohammad Al Thani, Chairman of Air Arabia. Challenging conditions "The political turmoil in the region has continued with further escalation in several countries. Despite the challenging market conditions, Air Arabia has achieved steady growth and solid profits for the second quarter," he said in a statement, adding Air Arabia has consistently shown "resilience" to dynamic market conditions. Asked how the carrier's performance is likely to be impacted due to high oil prices during the course of the year, Shuaa Capital's Murad said: "High oil prices will continue to put pressure on the company's profitability, but it's already factored in our analysis for the first and the second quarter." Delicate political conditions in the Middle East and North Africa weighed heavily on Air Arabia — just like they did on most regional carriers. As a direct consequence of the political unrest, Air Arabia was forced to delay plans to launch its fourth hub in Jordan, which was schedule to open in June, as the carrier's chief executive, Adel Ali, had recently said. The Sharjah carrier, which currently operates a total fleet of 27 new Airbus A320 aircraft on 66 routes, has existing hubs in Morocco and Egypt. The carrier has a total of 44 aircraft on order worth $3.5 billion (in list prices), of which it received two in 2010 and two in 2011 so far, with four more to join the fleet this year. Global profit drop High fuel prices resulted in a huge hit in global airlines' profits in the second quarter of this year even as European carriers recovered after suffering last year from volcanic ash cloud. According to the latest data released by global aviation body IATA (International Air Transport Association), early results from a sample of airlines globally show they will post $1.04 billion in profits for the second quarter of 2011, marking a massive drop from the $2.88 billion in profits for the same quarter a year earlier. "Early results for Q2 airline profits are showing the first year-on-year decline for eight quarters," IATA said yesterday in a statement.