Monday, 28 August 2017

Big Losses at flydubai

flydubai, the low cost airline from the United Arab Emirates have reported a sizable loss of Dhs142.5million, that around $38.8million for the first half of this year. The airline had reported a loss of Dhs89.9m in the same period last year, showing an increase of 58.5 percent.

Passenger numbers at the Dubai based airline increased to 5.4 million, up up 10.5 percent from a year ago and turnover always went up. Loads on the airlines routes also went op by almost 14 percent for the same period last year. Also increases this year was the amount of business class passengers travelling with the airline, up by 22 percent. 

“The demand for travel on flydubai remains strong and the airline has seen its overall market share grow,” the airline said in a statement. “These factors have, however, been offset by the price performance determined by the market."

The statement continues “The airline also faced comparatively higher fuel expenses during the reporting period with fuel costs accounting for 24.8 per cent of operating costs compared to 23.5 per cent in the previous reporting period. In addition, the airline added eight aircraft to its fleet since July 2016,” 

Ghaith Al Ghaith, CEO of flydubai, said, “The demand for travel from the growing number of our passengers remains strong. We will however continue to manage our cost performance and balance this with our long-term view of the potential for air travel in the region."

“We know that we need to remain flexible to the market dynamics across our network. We will continue our disciplined approach to increasing capacity.”

Flydubai also indicated that, historically, the trend for the second half has been stronger than the first half.  Arbind Kumar, senior vice president, Finance, at flydubai, said: “During the first six months of this year, we have seen pressure on both yield and cost. We continue to focus our efforts on three key areas: improvement in our cost performance, a broadening of our distribution and optimisation of our network."

“Knowing that we have faced a similar seasonality and trend in previous years, we will move ahead cautiously but strong in the knowledge that there remains much untapped opportunity.”

There has been a heavy increase of capacity across all airlines in the region which in turn has forced many operators to slash fares, leading to the weakening of yields and poorer margins, which may have had an adverse effect on the bottom line for flydubai. However the airline is expected to make some significant fuel savings towards the end of the year when they receive a number of brand new Boeing 737 MAX 8 aircraft. The airline expects to take delivery of at least five aircraft in December and which will be put into service during the fourth quarter.  

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