Air Arabia reported (11-Nov-2013) net profit remained steady year-on-year at AED341 million (USD92.8 million) for the first nine months of 2013. Revenue for the period increased 14% to AED2.3 billion (USD626 million) and passenger traffic increased 15% to 4.5 million. The carrier recorded a load factor of 81% for the period. In 3Q2013, net profit decreased 9% to AED206 million (USD56.1 million), revenue increased 6% to AED854 million (USD232.5 million) and passenger traffic increased 11% to 1.5 million. The decline in profit for the quarter was attributed to travel seasonality, particularly the timing of Ramadan. The carrier received two A320s in 3Q2013 and expects to take delivery of two more by the end of 2013. Air Arabia chairman Sheikh Abdullah Bin Mohammed Al Thani said, "Air Arabia is pleased to announce yet another nine months of solid financial performance, achieved despite the continued political instability affecting the regional travel market...Air Arabia’s robust financial performance, a function of our high seat load factor and operational excellence, further reflects the airline’s continued focus on generating profitable growth through innovation and excellent services." [more - original PR]
Air Arabia reports steady profit for first nine months of 2013
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CAPA's previous analysis of the 3Q2016 results of Europe's big three legacy airline groups highlighted a fall in their collective operating margin, after growth in 1H2016. This report shows that Europe's five leading LCCs, in aggregate, also suffered a fall in profit and margin in the quarter.
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Nevertheless, the LCC five remain collectively far more profitable than the legacy three. Moreover Europe's two most profitable airlines, Ryanair and Wizz Air, look set to increase their margin lead this year. Even easyJet, which has had a bad year by its standards, achieved a higher margin for calendar 9M2016 than the most profitable of the big three legacy groups, which was IAG.
The divergence of results in the European sector suggest that not all airlines are following the same cycle. However the collective margin decline for the continent's leading LCCs, and its major legacy airline groups, at least gives reason to question whether or not the cyclical upswing may have run its course.
easyJet: accelerating growth to take share from legacy airlines in strong easyJet airports
In spite of challenging market conditions and falling profits, easyJet remains on the offensive in its fight for market share with legacy airlines. It is also making contingency plans to apply for an EU AOC to ensure continued intra-European traffic rights in the post-Brexit future.
easyJet's revenue per seat, pre-tax profit and return on capital employed all fell in FY2016 (year to Sep-2016), the first reversal since before CEO Dame Carolyn McCall took the helm in FY2010. In spite of lower fuel prices, easyJet could not lower its cost per seat fast enough to offset the drop in unit revenue. Load factor was just above flat at 91.6%, so the drop in revenue per seat was all price-related. A series of external events put pressure on pricing – including terrorism, ATC strikes and the UK's Brexit vote.
Some airlines might tighten their capacity growth in the face of weak pricing, but easyJet plans to accelerate its seat growth from 6% in FY2016 to 9% in FY2017. It has its sights on an opportunity to take share from legacy airlines in airports where it already has a strong market position.