Flydubai's 2018 profits hit by fuel costs, posts Dh157m loss

Flydubais 2018 profits hit by fuel costs, posts Dh157m loss

By Waheed Abbas

Published: Wed 20 Feb 2019, 6:26 PM

Last updated: Wed 20 Feb 2019, 8:29 PM

Dubai - Budget carrier flydubai on Wednesday said it posted Dh157 million profit in the second half of 2018 but recorded Dh159.8 million loss for the full-year, hit by fuel costs.
Its total annual revenue grew 12.4 per cent to Dh6.2 billion compared to Dh5.5 billion last year.
"In line with expectations 2018 was a challenging year, however, we have continued to invest in our capacity and increased revenue. We optimised our network by increasing flight frequencies on existing routes and adding new routes and as they become established they will support our further growth," said Ghaith Al Ghaith, CEO of flydubai.
"Our performance in 2018 was impacted largely due to increasing fuel costs, rising interest rates and unfavourable currency exchange movements. Following our half-year Results, we continued to focus on further efficiency programmes across the business and these have resulted in a better second half. The emphasis we have put on these programmes is expected to result in an improvement to our financial performance," said Francois Oberholzer, chief financial officer of flydubai.
It had reported a profit of Dh37.3 million for the full-year in 2017.
The airline said its annual operating cost includes a price impact of Dh411 million in fuel costs.
Last year, 11 million passengers travelled across the flydubai network, a slight increase from 10.9 million from previous year.It recorded 89,157 departures last year as against 86,013 in the previous year. While it added 64 employees in 2018 financial year.
Saj Ahmad, chief analyst at StrategicAero Research, said flydubai's performance highlights competitive landscape around GCC and its traditionally stronger second-half results show that the airline is well placed to start 2019 on a more robust footing.
"While revenues were up over 12 per cent over the same time a year ago, passenger growth was modest, highlighting the ever growing choices and competition - crucially. Flydubai's strong yield growth up over 8 per cent demonstrahtes that the airline is making more money per seat than before. This is driven by its unique hybrid dual-class cabin offerings where it's business class suite aboard it's new 737 MAx fleet has been a real hit with passengers," Ahmad said.
Despite the sharp 5 per cent rise in fuel costs to 30 per cent, flydubai's induction of the new fuel efficient 737MAX will aid the longer term strategy of suppressing operational costs while expanding its network, he added.
Ahmad said flydubai's tie-up with Emirates will bolster financials in coming years as it benefit from higher fare paying passengers from Emirates' network.
"As we go into 2019, we are cautious but we remain confident in the knowledge that there remains much untapped opportunity and demand for travel across our network. Our priorities are to grow the airline sustainably, open up previously underserved markets, invest in our fleet and our cabins to offer our passengers the latest innovations on board and a better travel experience," said Ghaith Al Ghaith.
The carrier said three Boeing 737 MAX 9 aircraft are commencing operations this month.  In 2019, seven Boeing 737 MAX 8 aircraft will join the fleet. Nine Next-Generation Boeing 737-800 aircraft will be returned to the lessors at the end of their operating lease.

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