Middle East conflict dents Air Arabia’s first-quarter performance

UAE budget carrier remains strongly profitable and asserts confidence in recovery.

United Arab Emirates budget carrier Air Arabia recorded a fall of around 20% fall in its pre-tax and net profits over the first quarter, as the result of the Middle East conflict.

The airline’s revenues for the three months to 31 March slightly increased, to Dhs1.8 billion ($490 million), despite an 11% drop in passenger numbers.

Air Arabia’s operations were affected by the Iranian conflict which began at the end of February, disrupting UAE services and creating volatility in the fuel market.

The airline’s net profit fell by 22% but it still posted a surplus of Dhs278 million for the quarter.

It says it implemented “operational adjustments” in the quarter to mitigate the disruption, including re-routing of certain services and changes to flight schedules, in response to airspace restrictions and regulatory directives.

“Management has assessed the potential financial and operational implications of these events, taking into account the duration and extent of disruptions during the reporting period, as well as prevailing fuel price trends and demand patterns,” it states.

“[Air Arabia] has not identified significant indicators that the conflict has adversely affected the safety of its personnel, the continuity of its operations, its liquidity position or the recoverability of its assets.”

It says it is confident about recovery and states that its multi-hub growth strategy remains in effect.

The airline has 90 aircraft of which 68 are based across the UAE, primarily in Sharjah but with stations in Abu Dhabi and Ras Al Khaimah.

Its remaining 22 aircraft are located in Morocco, Pakistan and Egypt. All its aircraft are Airbus A320- and A320neo-family jets.

Chairman Sheikh Abdullah Bin Mohammad Al Thani says uncertainty “continues to weigh” on airline operations in the region.

“Despite these challenges, we remain confident in the strength of the local and regional economies we serve and will continue to navigate this environment with discipline and agility,” he states.