Air Arabia posts loss due to Covid-19 disruptions

Air Arabia, the UAE’s only listed airline, reported a net loss of Dh169 million in the first half of the year due to coronavirus-induced flight suspensions in the second quarter.

The Sharjah airline’s revenue in the first six months of the year to June 30 fell by 53 per cent to Dh1.02 billion year on year as passenger traffic at its four hubs more than halved.

Air Arabia carried 2.48 million passengers from its hubs in Sharjah, Ras Al Khaimah, Morocco and Egypt during the first half, a 57 per cent drop from a year ago.

“Air Arabia started the year 2020 with [a] strong performance promising another year of growth and profitability. However, the unprecedented impact of Covid-19 left airlines worldwide battling the strongest challenge in [their] history,” Sheikh Abdullah bin Mohamed, chairman of Air Arabia, said.

“The full impact of Covid-19 on airline operations was fully materialised in the second quarter as a result of border closures and flights suspension across all key markets.”

The budget airline’s operations in the second quarter were limited to repatriation, charter and cargo flights after the UAE suspended regular passenger flights to curb the spread of the virus.

The most severe impact of the health crisis on airline operations was in the second quarter, Air Arabia said.

The airline posted a net loss of Dh239m in the three months to June 30 as quarterly revenue fell to Dh120m, down from Dh1.14bn in the same period last year.

It took measures to reduce costs and preserve liquidity amid the pandemic. These included deferred cost and capital expenditure, workforce restructuring and cost rationalisation.

The airline said in May that it would reduce its workforce by about 3 per cent, joining competitors around the world in taking measures to cope with the plunge in air traffic demand caused by the pandemic.

Air Arabia, which has about 2,000 employees in total, cut 57 jobs, it said at the time.

“Air Arabia’s robust business model allowed the management team to act fast and take necessary measures to control cost and enhance liquidity while operating a mix of commercial flights where possible,” Sheikh Abdullah said.

“These early measures have resulted in [the airline] preserving cash and limiting the net loss of the first half to acceptable levels, while still being able to mobilise people during this intricate time and support repatriation efforts.”

The aviation industry’s prospects “remain strong” as airlines play a central role in the world’s economic recovery, he said.