Air Arabia Co. - AIRARABIA

Poised for Growth

Air Arabia’s total revenue reached AED 871 million in 1H2008, which is 70% over the same period last year. This increase in revenue is mostly due to a combination of a 33% increase in passenger numbers in 1H2008 and an 18% increase in yields.
As we discussed in our last update, profitability is being hampered by rising fuel prices. Fuel costs as a percentage of revenue increased from 30% in 1H2007 to 43% in 1h2008. Air Arabia’s fuel costs per ASK have been increasing at triple the rate of the increase in yields, as fuel costs per ASK increased by 100% compared to a 32% increase in yields over the past six quarters.
Air Arabia posted an EBITDAR of AED 186.4 million in 1H2008, 6% lower than our forecast. Net income increased by 39% in 1H2008, but this was buoyed by interest income of AED 79.5 million, without which net income would have declined by 25%.