Dubai-based low-cost carrier flydubai reported a loss of Dh142.5 million ($38.7 million) for the first half of the year despite revenues and passenger numbers going up.

The airline had reported a loss of Dh89.9 million ($24.4 million) for H1 2016.

Revenue rose to Dh2.5 billion ($680.4 million), up 9.9 per cent compared to the first six months of last year.

Passenger numbers increased to 5.4 million, an increase of 10.5 per cent compared to the first six months of 2016. The number of passengers carried per departure increased 13.7 per cent for the same period. The number of Business Class passengers carried per departure also moved up 22 per cent compared to the same period last year, said the airline.

In addition, flydubai contributed 19.4 per cent to the total growth at Dubai Airports compared to the first half of 2016. During the first six months of 2017, flydubai contributed 12.4 per cent of all traffic in Dubai.

The demand for travel on flydubai remains strong and the airline has seen its overall market share grow. These factors have, however, been offset by the price performance determined by the market. The airline also faced comparatively higher fuel expenses during the reporting period with fuel costs accounting for 24.8 per cent of operating costs compared to 23.5 per cent in the previous reporting period. In addition, the airline added eight aircraft to its fleet since July 2016.

The closing cash and cash equivalents position, including pre-delivery payments for future aircraft deliveries, remained robust at Dh2.1 billion ($571.5 million).

Ghaith Al Ghaith, chief executive officer of flydubai, said: “The demand for travel from the growing number of our passengers remains strong. We will however continue to manage our cost performance and balance this with our long-term view of the potential for air travel in the region.  We know that we need to remain flexible to the market dynamics across our network. We will continue our disciplined approach to increasing capacity whilst pursuing our broader goal of firmly establishing flydubai at the centre of the global travel industry.”

Arbind Kumar, senior vice president, Finance of flydubai, said: “During the first six months of this year, we have seen pressure on both yield and cost. We continue to focus our efforts on three key areas: improvement in our cost performance, a broadening of our distribution and optimisation of our network.  Knowing that we have faced a similar seasonality and trend in previous years, we will move ahead cautiously but strong in the knowledge that there remains much untapped opportunity.”
 
Operational performance
Fleet: During the first half of 2017, flydubai took delivery of the last of the Next-Generation Boeing 737- 800 aircraft receiving one aircraft in February and a second aircraft in April. The average age of the fleet is 4.0 years and this underscores flydubai’s strategy to operate a young and modern fleet.

Network growth: Flydubai started twice-weekly flights to Sylhet on March 15, increasing to six flights per week in May.  For the first time, flydubai launched flights for the summer season to Batumi in Georgia, Qabala in Azerbaijan and Tivat in Montenegro. Due to the popularity of direct flights to these new holiday destinations services have been extended to October.  

Outlook
The previous investments in product and services are returning results as well as enabling flydubai to retain and attract new passengers. The airline has embraced new technologies with the aim to improve costs through dynamic yield management and using real-time data to enhance the customer journey.

A new model aircraft: Flydubai is the first airline in the region to take delivery of the Boeing 737 MAX 8 aircraft. The airline is set to receive six new aircraft by December with entry into service during the fourth quarter providing greater flexibility, reliability and efficiency to its fleet.

New routes: Flydubai has been operating flights to Russia since 2010 and will further expand its network to 10 destinations. Twice weekly flights from Dubai to Makhachkala and Voronezh will operate from the end of October 2017. In addition, flights from Dubai to Ufa, operating three times a week, will relaunch on October 31.

A new headquarters office: The airline is building a new headquarters office located on the Emirates Road, which is expected to be available for occupation from 2019. This investment will support the airline’s continued growth.

Al Ghaith, looking towards the year ahead, said: “During the next six months we will see the new Boeing 737 MAX 8 aircraft bring greater operational efficiency to our fleet, we will open up previously underserved destinations on our network, see more passengers travel with us and continue to invest in the future growth of the airline. There remains much potential for flydubai as part of the UAE’s aviation hub and a key driver of the sustainable development of the trade and tourism industry.” - TradeArabia News Service