Air Arabia to launch Morocco hub

AIR ARABIA: Morocco hub to be launched but waiting for market conditions to improve regarding additional aircraft purchases. (Getty Images)

Low-cost carrier Air Arabia is aiming to launch its Morocco hub by May but is waiting for market conditions to improve to finance the acquisition of 44 aircraft, its chief executive said on Tuesday.

The region's largest budget carrier by market value said in February it would launch its Casablanca operations at the end of March.

"It's a work in progress. When you're trying to get an operating certificate for an airline you progress with the government authorities," Adel Ali told reporters on Tuesday.

"We have aircraft delivered, ready to go to Morocco and operate. As soon as the logistics are sorted out we will be ready to operate and it should not be long," he said, adding it was targeting the end of April or early May.

The aim is to have about 25 aircraft flying out of the Moroccan city to at least 60 destinations in Europe and Africa within five years, Ali said.

Air Arabia has a fleet of 16 A320 aircraft, and has placed an order for 44 additional A320s from Airbus, a unit of EADS , according to the airline's website.

Delivery of the aircraft, worth around $55 million each, would take about five years, Ali said.

"We see no issue with financing the airplanes," Ali said. "We could have done it earlier. The only reason we are not doing it is that it's not the right time to get into that."

The airline is in ongoing discussions with local and international financial firms "to get the best deal available", he said, without elaborating.

A global decline in travel would affect earnings, Ali said, but a lower oil price would provide support for the airline, which in recent years had profited from an economic boom and rising demand for discount travel in the Gulf Arab region.

The air transport sector took a strong blow in 2008, first by rising fuel costs, then by the financial crisis, although low-cost carriers typically perform better in an economic downturn than national carriers by competing on price.

Ali said first-quarter earnings would be "positive", but declined to be more specific. Air Arabia posted a 45 percent increase in fourth-quarter profit, which was below expectations.

"There is pressure in the region and globally on the yield simply because there are far too many seats available in the world for people to travel," Ali said. "Having said that, there is the benefit of lower oil prices."

Air Arabia hedged 60 percent of its crude oil requirements for 2009 last December, Ali said, but declined to say at what price. The average price for NYMEX crude in December was $44.6 per barrel.

The airline is on track to launch its new services to Athens and Goa next month, and Ali said all its expansion plans were intact. Air Arabia was keen to expand further into Pakistan, he said.

"We would like Pakistan to be like India," he said, adding that once the airline has launched its Goa service, Air Arabia will have 150 flights to destinations in India every week, versus only seven to Pakistan.

"The Indian Civil Aviation Authority opened their door to us and we are hoping that Pakistan will do the same," he said. (Reuters)

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