GulfBase GCC Cap Indices
IndexLevelChg%
Large Cap4,023 0.80
Med Cap3,850 0.49
Small Cap4,907 0.91
Micro Cap8,519 0.62

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GFH 0.46 3,578,848
BKSB 0.14 275,822
DSI 0.39 45,711,538
ALINMA 16.41 24,441,807
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ALKHODARI 9.95 301,307
DANA 0.6 9,001,191

Air Arabia Co. - AIRARABIA

Source: NBK Capital

Fuel Hurts Margins

The number of passengers flying with Air Arabia during 1Q2008 grew by 31% year-on-year to 757 thousand. This increase is a result of the airline’s ability to increase output by 31% while maintaining its load factor at 85%.
Air Arabia saw its revenues grow by 56% in 1Q2008 (year-on-year) to reach AED 383 million. However, the rise in fuel prices has an adverse effect on operating margins. Fuel costs as a percentage of revenue increased from 30% in 1Q2007 to 39% in 1Q2008. Since Air Arabia has not been hedging its fuel costs, its only defense against rising fuel prices has been adding fuel surcharges- a mechanism that takes some time for its effects to kick in.

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