Challenging Business Conditions And Strong Dollar Affect Airlines

Flydubai, the second largest airline at Dubai International by passenger numbers, reported on Wednesday a 59.7 per cent drop in profit for 2015 that it blamed on challenging business conditions, including the strong dollar.

The airline made Dh100.7 million ($27.4 million) in the 12 months to December 31, 2015, down from a Dh240 million profit in the previous year, according to an emailed statement. Revenue increased 11 per cent to Dh4.9 billion from Dh4.47 billion in 2014.

Weakening economic conditions in overseas markets, including in Russia where passenger numbers fell 22 per cent, combined with a dollar that surged in 2015 put its yield under pressure, flydubai said. It also said service disruptions, including flight suspensions and reroutes due to conflict in the Middle East, and launching 18 new destinations that are yet to mature, added more stress.

“The overall trading environment has remained challenging,” flydubai Chief Executive Ghaith Al Ghaith said in Wednesday’s statement.

The second-half of the year was stronger for the airline with a Dh248 million profit, up 26 per cent, compared to the Dh147.4 million first-half loss it reported back in October.

It was never “going to be a banner year” after a loss in the first-half, Will Horton, senior analyst at CAPA — Centre for Aviation, told Gulf News.

“Flydubai brought very quick financial stability to its operation in the second half. There can be more tightening of the screws in 2016 but the foundation is there. A solid full-year turnaround in 2016 can see flydubai resume its course in 2017,” he said by email.

Total passenger numbers increased by 25 per cent to 9.04 million and the airline carried 40,441 tonnes of cargo, a 28.4 per cent improvement on the previous year. The continuing fall in the oil price saw the fuel bill account for 30.3 per cent of operating costs, down from 36 per cent in the previous year. Flydubai said it has hedged 16 per of its fuel requirements for the next two years.

New aircraft

In 2015, the airline took delivery of its 50th aircraft from the first order it made at the Farnborough Airshow in 2008. Over the next two years, the airline said, it will take delivery of 16 new aircraft, including five Boeing 737 MAX 8s, and retire seven aircraft.

Flydubai split its operations in 2015 with the launch of 70 new weekly services from Al Maktoum International at Dubai World Central (DWC) while maintaining existing flights from Dubai International.