UAE's Air Arabia Q2 net up 10%, misses forecasts

Middle East's largest low-cost carrier posts AED90m ($24.50m) Q2 net profit.
UAE's Air Arabia Q2 net up 10%, misses forecasts
By Neeraj Gangal
Sat 08 Aug 2009 12:01 PM

UAE's Air Arabia, the Middle East's largest low-cost carrier, posted a 10 percent rise in second-quarter net profit to AED90m ($24.50m), missing analysts' forecasts.

Net income in the three months to June was up from AED82m in the year-earlier period, it said in a statement on Saturday.

Forecasts of four analysts for Air Arabia's second-quarter profit ranged from AED100m to AED151m in a Reuters survey in July, the newswire reported.

Meanwhile, the company’s net profit for the first half of this year stood at AED193m, an increase of 21 percent compared to AED160m for the first six months of last year. During the first half of 2009, the company registered a turnover of AED922m, up six per cent from AED871m for the first half of 2008.

According to the company statement, the airline served 1,953 million passengers during the first half of 2009; a 20 per cent increase compared 1.6 million passengers during the same period last year. Air Arabia’s average seat load factor – or passengers carried as a percentage of available seats – for the first six month of 2009 stood at an extremely impressive 80 per cent.

“Tough economic conditions continue to impact the global aviation sector” said Adel Ali, board member and Group CEO of Air Arabia. “We are pleased with the positive results achieved today amidst the ambiguity of global economy performance and the impact of swine flu on air travel trends. Air Arabia’s continuous profitability and growth figures demonstrate the fundamental strength of the airline’s dynamic business model”.

Ali added: “The coming period continues to add pressure on aviation sectors and we therefore remain focused on maintaining highest levels of operational cost efficiency. We are confident that Air Arabia’s strong network, attractive fare-options, value-added services and commitment to passenger convenience will enable it to maintain its leadership position in the regional LCC sector.”

According to newswire Reuters, Goldman Sachs resumed coverage of Air Arabia on Aug 6 with a "buy" rating, saying the firm was poised to benefit from air traffic growth in the region. It set a price target of AED1.34 on shares of Air Arabia, which last traded at AED1.05 on Thursday in Dubai.

On Aug 4, Nomura initiated Air Arabia with a "buy" rating and price target of AED1.40, Reuters added.

"We believe the outlook for Middle East carriers is more resilient than the market expects in the current downturn," Nomura said.

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