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Flydubai announces 14.4% passenger growth in 2016

Posted 1 February 2017 · Add Comment

Flydubai has announced its full-year results for 2016 reporting a profit of AED 31.6 million (USD 8.6 million).

It has reported total revenue of AED 5 billion (USD 1.37 billion) an increase of 2.4% compared to the same period last year. The stronger second half, driven by increased passenger numbers, was impacted by downward pressure on yield leading to lower overall revenue growth reflecting a continuation of the same adverse factors reported in the first half.

Sheikh Ahmed bin Saeed Al Maktoum, chairman of Flydubai, said: “These results see flydubai report its fifth consecutive full-year of profitability. In 2012, our third year of operation, we carried 5.1 million passengers. This year, we have carried 10.4 million passengers demonstrating that flydubai continues to help change the way both business and leisure passengers travel around the region. An established tourism destination and global centre for business together with the UAE’s geographic location has supported the need for increased connectivity.” 

Ghaith Al Ghaith, chief executive officer of Flydubai, reviewing the annual results for 2016, commented: “Over the last two years we have seen passenger traffic grow cumulatively by 52% in terms of RPKM. We continue to demonstrate that we gain loyal customers across our network that recognise the benefits of direct air links and enjoy our on-board offering. The continuation of mainly lower fuel prices and on-going cost management efforts are reflected in the 16% improvement in terms of ASKM over the last two years. We have however seen a difficult pricing and operating environment.”

Cost and revenue performance

The closing cash and cash equivalents position, including pre-delivery payments for future aircraft deliveries, remained strong at AED 2.3 billion. 

Fuel costs were 25% of operating costs compared to 30.6% in the previous year, against a backdrop of lower fuel prices for the year, with legacy fuel hedges impacting only 21% of the volume for full year 2016. 

Ancillary revenue comprising of baggage, cargo and inflight sales contributed 13.8% of revenue; dropping from 15.1% from the previous year.

Operational performance 

Aircraft deliveries: 8 Next-Generation Boeing 737-800 aircraft joined the fleet in 2016 in support of network expansion. The average age of the fleet was 3 years 8.5 months. 

Business Class: The growth in the number of Flydubai’s Business Class passengers continued and saw the airline carry 2.4 times the number of passengers as in 2014. The Subcontinent saw the strongest demand for Business Class carrying more than double the number of passengers. This was followed by the Caucasus which grew by 88%, as a result of a liberalisation of the visa rules, creating an increased demand from both inbound and outbound traffic flows. In addition, Business Class passengers grew by 38% in Europe and 24% in the GCC and Middle East. 

Network expansion: During the course of the year, increased flight frequency on existing routes and a maturing in the performance of the 41 new routes launched in 2014 and 2015 saw ASKM grow by 9%. 

The launch, on 29 November, of flights to the popular destination of Bangkok was the first route outside of the GCC to start operations with a double daily service. Across the network, Flydubai reported the following passenger flows:

GCC & Middle East: Flydubai carried 28% of all traffic between Dubai and the GCC and Middle East.

Europe: passenger numbers in Europe grew by 19%.

Russia: with 21 flights per week across 7 destinations passenger numbers increased by 3%.

Ukraine: overall flydubai passenger numbers on flights between Ukraine and Dubai increased by 26%. 

Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan): its 5 points across the region saw flydubai contribute 23% of the total growth at Dubai airports.

Subcontinent: passenger numbers on the Flydubai network grew by 22%.

Africa: passenger numbers from its 11 points grew by 3% and contributed 12% of the total growth at Dubai airports.

Al Maktoum International (DWC): Flydubai has been operating from DWC since October 2015. With its two gateways, Flydubai will continue to gradually increase its operations at DWC based on the further expansion of the airport. 

Staff numbers: Flydubai continued to grow its experienced team with a total of 3,773 staff including 746 pilots, 1,618 cabin crew and 282 engineers. 

Key Operating Figures 

FZ981: following the tragic loss of FZ981 on 19 March 2016, Flydubai remains focused on supporting the families who lost their loved ones. In addition to providing initial financial assistance payments and interim financial assistance payments, our Long Term Care Team continues to be available to the bereaved families who are our primary concern. Plans are being put in place for a memorial to mark the first year anniversary. 

Ghaith Al Ghaith, CEO of Flydubai, said: “Flydubai continues, through its accredited representative, to support the investigation into the tragic accident. Our long term family assistance team continues to be available for all the families.” 

Outlook  

During 2017, Flydubai will be the first airline in the Middle East to receive the new model Boeing 737 MAX 8 and the first of these aircraft will enter into service in the second half of the year. The overall capacity will not grow during 2017, as short-term capacity needs are adjusted, due to the ongoing challenging operating environment. Since launch, one of the principles of Flydubai’s fleet planning strategy was to maintain a young fleet. Under these plans, the airline will see the eight-year lease term expire for 4 Next-Generation Boeing 737-800 and during the year these aircraft will be retired from the fleet. 

Al Ghaith added: “We will remain prudent throughout 2017 as we will continue to operate in a challenging socioeconomic environment. Yields will remain under pressure and we expect to report flat growth in the year ahead. We are looking forward to receiving the first Boeing 737 MAX 8 in the region, which will bring further fuel and operating efficiency to our young modern fleet. We are focused on our strategy to lead in innovation, to provide an unrivalled experience on board and on the ground, as we continue to meet the travel demands of our passengers.” 

Analyst Saj Ahmad said: “Flydubai's impressive turnaround in the second half of the year, despite the pressure from competition and falling yields means that the carrier is in great shape as it looks forward to its move later this year to Dubai World Central.

“Since 2012, Flydubai has more than doubled it's passenger base to over 10m, while recording a sharp 14.4% rise in traffic over the same period a year ago. 

“Coupled with one of the industries highest utilisation rate for the 737-800 at over 13.5 hours a day has helped the airline expand organically while economies of scale from the 57-strong airplane feelt has pushed fuel costs lower to just 25%, down 5% over the last reporting period.”

Ahmad added: “The rise in revenue to 5bn AED and profits to 31m AED underscores Flydubai's vibrancy with its unique hybrid model that employs a dedicated business class product that none of its GCC rivals have or can match. This has helped offset some of the pricing and yield erosion seen in lower cabin fares and has allowed Flydubai to be less beholden to one passenger type as it diversifies it's network and services. 

“Given the sharp rise in traffic seen at Dubai World Central for 2016, led almost entirely by Flydubai, its inevitable that the new airport will gather more traffic momentum next year once Flydubai has shifted there completely. Not only will it have a pick of the prime slots, but it'll generate and build upon its customer base that has come to benefit from Flydubai's efficient operations that save passengers time and provide excellent connections.

 

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