Air Arabia (AIRA.DU)

For the year ended December 2008, Air Arabia reported net profits of AED 509.73 million as against AED 281.97 million in 2007, an increase of 80.8%. Revenues accelerated 157.0% to AED 2,065.79 million, of which passenger revenue contributed AED 1,936.91 million that is 93.8% of the total revenue. A 104.6% boost in other incomes and a 62.8% hike in profit on bank deposits also helped its bottom line growth. In 2008 a total of 3.6 million passengers chose to fly with Air Arabia. The increase in revenues also includes AED 31.39 million and AED 54.45 million of baggage revenue and airport handling revenues, respectively. The company’s gross profit improved 86.0% to AED 394.21 million, despite a 182.5% increase in cost of sales. Air Arabia’s operating profit grew 88.3% to AED 290.23 million from AED 154.12 million in 2007. The company reported earnings per share (EPS) of AED 0.11 as against AED 0.06 in 2007.

For the period under review, Air Arabia’s total assets increased 9.9% to AED 5,861.57 million, as total current assets declined 35.2%. Meanwhile, the company’s non-current assets gained 72.6% to AED 3,851.09 million. Shareholders’ equity increased 7.0% to AED 5,383.61 million. Meanwhile, retained earnings increased 138.5% to AED 787.70 million. Moreover, return on equity reached 9.5% from 5.6%, and return on assets advanced 8.7% from 5.3%. Air Arabia’s shareholders’ equity to assets ratio fell to 91.8% from 94.3% in 2007. The carrier is for the first time going to distribute dividend after it went public in 2007 with a proposal to distribute AED 0.10 per share as dividends.

Company Profile

Air Arabia was established in 2003 by the Government of Sharjah and is based at the Sharjah International Airport. It was the first and currently the largest low-cost carrier (LCC) in the GCC region, operating a fleet of 18 Airbus A320 aircrafts (leased and owned). An LCC is an airline that offers generally low fares at the cost of many traditional passenger services. Currently, the airline serves 44 destinations across the Middle East, North Africa, Europe, CIS, South and the Central Asia. Air Arabia was awarded the 'Low-Cost Carrier of the Year' for the second consecutive year at the Aviation Business Awards 2008. The company also received the gold award in the best airline category at the MENA Travel Awards. It has also won the coveted AVEX award for ‘Best Regional Airline’.

Air Arabia went public through an IPO on March 18, 2007 with 55% of its share capital worth AED 2.618 billion on offer. In July 2007, the airline listed its shares on the Dubai Financial Market (DFM). Currently, the public holds 54.87% and the Department of Civil Aviation-Sharjah holds 17.40%, and Al Maha Holding Company holds 8.70%. Its subsidiaries include Information Systems Associates (51.00%) and Red Marketing Communications (100.00%). The Sharjah-based carrier intends to expand its ancillary revenues aggressively via several subsidiaries and joint ventures in Sharjah. It is also planning to establish another hub in Casablanca, Morocco by 2009 to cater to European and African markets. The company entered into an agreement with Regional Airlines, Morocco’s largest private carrier. Air Arabia also entered into a joint venture with Yeti Airlines International of Kathmandu. Air Arabia’s load factor was one of the highest in the
industry with 85.0% in 2008.

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