Air Arabia in early talks to buy 100 aircraft
Sharjah-based budget carrier’s next order in 2019 to grow fleet, replace old planes
Air Arabia, the Sharjahbased low-cost carrier, is planning to purchase at least 100 aircraft in 2019 as it aims to expand its fleet and replace old aircraft.
Adel Ali, chief executive of Air Arabia, said yesterday the airline is currently in talks with manufacturers including Boeing, Airbus and Embraer, but that it has not finalised its decision on which aircraft model(s) it will order.
“We’re due to make an order. We need an order to replace the existing airplanes in the next few years. We’re looking at A320s, A321s; we’re looking at Boeing, the CSeries, the new Embraer — we’d be naive not to,” the CEO told reporters.
“Currently, we’re just under 60 airplanes, and I can see by about 2025, we would probably be about 100 or 100-plus depending on what happens in the world.”
He said a decision on the order is likely to be made in 2019, after which the carrier will look at options for financing. “We don’t see a problem or any issues in terms of getting the finance from banks or any other form of funding,” Ali said, noting, however, that Air Arabia is unlikely to issue any bonds or sukuk to finance the order. He did not specify how much the airline will be spending on the aircraft order, but said it has not yet started talks with banks about financing.
As for routes, Air Arabia is eyeing new markets in Africa, East Europe and Asia. The airline will be taking delivery of five A321 long-range aircraft next year from an earlier order it made, and plans to increase capacity to current routes and add new destinations.
Ali said the company already has some landing rights in China that are not being exercised, and is planning to launch new routes in Africa, specifically west and central Africa.
New brand identity
Discussing the broader operating environment, the CEO said that Air Arabia is benefiting from an improved economy and increasing demand for air travel, expecting the industry to continue to grow. “The (rising) cost of fuel is not affecting us much because of our hedging policies,” he said. “We are one of the companies that are lucky — we use fuel hedging a lot, so we are reasonably well-hedged. I think a good fuel price is not bad for the region because it improves the economy and more people will travel.”
Ali was talking at an event held in Air Arabia’s hangar at the Sharjah International Airport to mark the carrier’s 15th anniversary and launch a new brand identity.
The new identity aims to reflect the company’s innovative approach and appeal to younger travellers. It saw the airline refurbish its aircraft seats and update its logo, but Ali said that wasn’t a large investment and came from Air Arabia’s regular annual marketing spend.
Asked for updates about Air Arabia’s exposure to Abraaj, the embattled private equity group that filed for provisional liquidation in June, Ali said the Dubai-listed airline will update the bourse with any developments. “I think there’s a lot of work going on [from] all the creditors, including us, on this subject. These things normally take time. I can tell you it has no impact on the growth of our business, on the expansion plans, or on the airline,” he said.