Air Arabia, the Middle East’s largest listed low-cost airline, posted a 12 percent decline in first-quarter net profit as rising fuel costs and political unrest put pressure on margins.
The Sharjah-based carrier saw a net profit of AED44.2m for the three months to March 31, down from AED50m in the same period a year earlier, the carrier said in a statement Wednesday.
Revenue for the quarter rose six percent to AED513m, up from AED482m in the year-earlier period.
“We are satisfied with our results for the first quarter of this year that is in line with our expectations, given the region’s uncertainty,” said Sheikh Abdullah Bin Mohammad Al Thani, chairman of Air Arabia in a statement to the Dubai bourse.
“Though the region has clearly shown positive signs indicating the emergence from the more serious effects of the global financial downturn, the rise in fuel costs continues to challenge regional carriers.”
Air Arabia said it carried 1.2 million passengers in the first quarter, a rise of 11 percent on the same period a year earlier. Average seat load factor rose 6 percent to 85 percent.
Tim Clarke, president of Emirates Airline, warned Tuesday that low-cost carriers would be some of the first casualties if oil prices continue to soar.
“It will bring us all to our knees, not just the aviation industry but everything else,” he said.
Air Arabia took delivery of two A320 aircraft in the quarter, part of a 44 aircraft order with Airbus. Four more are scheduled for delivery this year.
The increase in aircraft is part of the carrier’s aim to launch eight new routes in 2011, bringing the total number of destinations it serves to 75 by the year-end.
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