Flydubai releases half-year results showing increased passenger growth
Flydubai has announced its half-year results for 2016 and has reported total revenue of AED 2,302 million (USD 627 million) an increase of 5.4% compared to the first six months of last year and a loss of AED 89.9 million (USD 24.5 million) 39% lower than the same period last year.
Passenger numbers have increased to 4.9 million demonstrating sustained strong growth; an increase of 16.5% compared to the first six months of 2015. The number of Business Class passengers carried, per departure, saw an increase of 19% compared to same period last year.
In the first half of its financial year, Flydubai has seen an increase in the flight frequency to existing destinations on its network including Bahrain, Baku, Belgrade, Bucharest, Muscat and Salalah as it grows the demand for travel and passengers recognise the benefits of direct air links.
Ghaith Al Ghaith, chief executive officer of Flydubai, commenting on the Half-Year Results for 2016, said: “Flydubai’s network continues to mature offering our passengers enhanced connectivity as we meet the growing demand for travel in the region. Looking ahead to the second half of the year, we have started to receive the first deliveries from the order for 111 aircraft placed in 2013 with a total of 8 aircraft scheduled to join our fleet between May and December.”
Reflecting on the tragic loss of FZ981, Ghaith Al Ghaith, said: “Saturday 19 March brought news you never hope to hear and all those who lost loved ones remain upper most in our thoughts. Our Long Term Family Assistance Team remain available to all families for as long as they require.”
Mukesh Sodani, chief financial officer said: “We have seen continued pressure on yields due to the uncertain international economic situation set against a backdrop of lower oil prices and adverse currency exchange rates. We maintain a sharp focus on cost improvement while pursuing our broader goal of expanding our network and our service offering.”
Lower fuel prices, together with a reduction in its hedging position from 41% last year to 22% this year, saw fuel account for 23.5% of total operating cost down from 30.6% last year.
In the first half of 2016, Flydubai’s average fleet age was 3.7 years. During the same period, flydubai has issued three Sale and Leaseback mandates for a total of eight Next-Generation Boeing 737-800 aircraft. One aircraft joined the flydubai fleet in May and a second in June. The closing cash and cash equivalents position, including pre-delivery payments for future aircraft deliveries, remained robust at AED 2.4 billion.
Outlook – July to December 2016
Flydubai has received positive feedback from its passengers about its services from Al Maktoum International (DWC) which provides further opportunities for growth in 2017 beyond the services it is already operating.
The six aircraft deliveries planned during the second half of 2016 will enable 77 flights per week to be added to services from Dubai International to Almaty, Asmara, Astana, Bahrain, Bangkok, Bishkek, Bratislava, Colombo, Dar es Salaam, Entebbe, Erbil, Kiev, Male’, Moscow, Odessa, Prague, Tbilisi, Yerevan, Yekaterinburg and Zanzibar. Flights from DWC to Kathmandu will increase to 14 per week from 10 October.
Ghaith Al Ghaith, commenting on the outlook for the remainder of the financial year, said: “Our Results have shown the same trend as last year and we expect a stronger second half. From our robust platform, we will continue to drive sustainable growth and operational performance to meet the demand for affordable travel from our passengers. Supported by the new aircraft deliveries, we will expand our convenient services across our network and see the start of double daily flights to Bangkok.”
Analyst Saj Ahmad commented: “Flydubai's first half performance reflects the strength and robustness not just of the brand, but also that of the intra-GCC low cost market.
“The pressure on yields has been driven by greater competition, however, Flydubai's unique dual-class cabin product offering has allowed the carrier to shield itself to rivalry but also helped drive up revenues by 5.4% to $627m.
“In turn, this revenue growth has been bolstered by rising passenger traffic out of both Dubai International and Dubai World Central to almost 5m, a rise of 16.5% over the same time a year ago.
Ahmad added: “While the immediate aftermath of the tragic crash of FZ981 hit demand, the airline has worked tirelessly to assist all affected parties as well as the investigative authorities. Despite the challenges the tragedy created, Flydubai has bounced back strongly.
“The delivery of new 737-800s as well as it's first tranche of new fuel efficient 737 MAX 8s, these will further aid Flydubai to maintain its competitive edge to suppress costs and develop new city pair frequency growth as it continues its organic growth policy.
“Moving to Dubai World Central by the end of next year will allow Flydubai to truly unlock it's growth capability going forward and its inevitable in my mind they'll need to exercise and procure more 737MAXs before the decade is out.”