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Flydubai 2016 profit tumbles but revenues rise

Profit at state-owned budget carrier flydubai plunged last year, a sign of pressure on the Middle East’s aviation sector, but revenue continued rising as Dubai strengthened its role as an international hub.

Profit sank to 31.6 million dirhams ($8.6 million) in 2016, the airline said on Wednesday, from 100.7 million dirhams in 2015. But revenue increased 2.4 percent to 5 billion dirhams.

Flydubai carried a record number of passengers last year, up 14.4 percent to 10.4 million people, as it launched flights to Bangkok and increased flight frequency on existing routes. Its fleet grew to 57 aircraft from 50.

“Over the last two years we have seen passenger traffic grow cumulatively by 52 per cent in terms of revenue passenger kilometre (RPKM). We continue to demonstrate that we gain loyal customers across our network who recognise the benefits of direct air links and enjoy our onboard offering,” said Ghaith Al Ghaith, CEO of flydubai.

“The continuation of mainly lower fuel prices and ongoing cost management efforts are reflected in the 16 per cent improvement in terms of available seat kilometre (ASKM) over the last two year,” he added.

However, Al Ghaith said the pricing and operating environment was difficult. Slower economic growth in the Gulf due to low oil prices and a strong U.S. dollar, to which the United Arab Emirates dirham is pegged, pressured yields.

A flydubai passenger plane crashed in Russia in March last year, killing all 62 people on board. Flydubai said it was continuing to support an investigation into the accident.

“We will remain prudent throughout 2017 as we will continue to operate in a challenging socioeconomic environment. Yields will remain under pressure and we expect to report flat growth in the year ahead,” Ghaith said. The airline said its total capacity would not grow this year.

(With inputs from Reuters)