Dubai-based low cost carrier says it took a big financial hit from the rising cost of fuel during the first six months of 2018
Dubai-based flydubai on Wednesday reported a half-year loss of AED316.8 million ($86.3 million) as the airline took a big hit of fuel as oil prices rose.
The low-cost carrier said in a statement that it suffered a AED175 million impact in the first six months of 2018 due to a 35 percent increase in oil prices compared to the same period last year.
Total revenue increased to AED2.8 billion for the six-month period, up by 10.4 percent as passenger numbers remained steady at 5.4 million.
During the first six months of 2018, flydubai said it contributed 12.3 percent of all traffic in Dubai, adding that it has undertaken a systematic review of the performance of its network resulting in the cancellation of operations to some destinations as well as investment in the development of other routes.
flydubai said the economic and geopolitical climate remains challenging dampening demand for travel. Yield has stabilised although this has not been able to sufficiently offset the impact of higher fuel costs, rising interest rates and a stronger dollar.
Ghaith Al Ghaith, CEO at flydubai, said: “We have continued to see a tough trading environment and the half-year results reflect these short-term challenges. We continue, however, to invest in our fleet, network and operations recognising opportunity as we look to the future.”
Arbind Kumar, senior vice president, finance at flydubai, added: “We have seen good growth in our revenue during the first six months of this year. We remain focused on the three priorities we had previously set - to improve our cost performance, broaden our distribution and optimise our network whilst keeping our cost management plan under constant review.
"The stronger dollar, rising oil price and higher interest rates are expected to continue to impact our performance and we will need to maintain a tight grip on the deployment of our capacity.”
Fuel costs were 29.2 percent of total operating costs during the review period while ancillary revenue comprising baggage, cargo and inflight sales contributed 11 percent of revenue.
As part of its network review, flydubai launched and restarted a total of 10 routes, operations to a further 10 destinations were cancelled and two routes were suspended.
Al Ghaith, commenting on the outlook for 2018, said: “Although higher oil prices will continue to affect our operating costs and performance in the second half; pricing stability at the current level is also likely to stimulate demand for regional travel.”