Southwest Airlines leads US fare increase; Air Arabia to cut dividend

Dallas-based LCC Southwest Airlines has successfully led a price increase across major US carriers, following its decision to increase fares by USD5 per sector. The increase was followed by United Airlines, American Airlines, US Airways, Continental Airlines, Delta Air Lines, Frontier Airlines, JetBlue Airways and AirTran Airways. Southwest expects the fare increase to stick.

Shares in Southwest were 1.6% higher on Monday, while JetBlue was 0.3% higher.

Air Arabia stated it plans to reduce its annual dividend from AED10 (USD2.72) in 2009 to AED8 (USD2.18) for 2010, as the carrier reported a 32% year-on-year reduction in net profit in 4Q2011. Chairman Sheikh Abdullah Bin Mohammad Al Thani stated he saw "significant growth opportunities in 2011 based on Air Arabia's ongoing expansion strategy".

Air Arabia financial highlights for the 12 months ended 31-Dec-2010:

  • Revenue*: USD566.3 million, +5.5% year-on-year;
    • Passenger: USD514.2 million, +4.7%;
  • Direct costs: USD481.5 million, +12.0%;
    • Fuel: USD191.4 million, +23.4%;
    • Labour: USD 87.1 million, +5.5%;
  • EBITDAR: USD160.6 million, -20.5%;
  • Operating profit: USD20.4 million, 21.0%;
  • Net profit: USD84.3 million, -31.5%;
  • Passenger numbers: 4.5 million, +10%;
  • Passenger load factor: 83%, +3 ppts;
  • Revenue per passenger: USD 134.22, -5.7%;
  • Cost per passenger: USD108.1, +5.9%;
  • Cost per passenger excl fuel: USD65.07,  +1.7%;
  • Fleet: 25 aircraft, an increase of four aircraft;
  • Total assets: USD1734 million, +4.9%;
  • Total liabilities: USD270.4 million, +64.6%.

* Based on the conversion rate USD1 = AED3.67291

Selected PEA daily share price movements (% change): 21-Feb-2011