Air Arabia loses $46 million in H1 as Covid impact is laid bare

UAE low-cost carrier says cost cutting measures have limited losses to ‘acceptable levels’
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Travel restrictions introduced in the second quarter of 2020 have weighed heavily on low-cost carrier Air Arabia, which has announced that it made a loss of AED 169 million ($46 million) in the first half of the year.

“The full impact of Covid-19 on airline operations was fully materialised in the second quarter as a result of border closures and flights suspension across all key markets,” said Air Arabia’s chairman, Sheikh Abdullah Bin Mohamed Al Thani.

Turnover for the first six months of 2020 was AED 1.021 billion ($278 million), a drop of 53% compared to the same period last year. Air Arabia carried 2.48 million passengers in the period, a drop of 57%.

The UAE suspended passenger flights in and out of the country on 24 March as countries around the world began to close their borders in an effort to curb the Covid-19 pandemic.

Air Arabia lost AED 120 million ($33 million) in revenues in the second quarter as a result of the suspension, leading to a loss of AED 239 million ($65 million) in the quarter.

The airline however continued to operate a number of repatriation, charter, and cargo flights in a bid to maintain some level of liquidity. The business also took cost cutting measures including deferring capex and laying off staff.

Sheikh Abdullah Bin Mohamed Al Thani said that Air Arabia had started the year with “strong performance promising another year of growth and profitability”.

“However, the unprecedented impact of Covid-19 left airlines worldwide battling the strongest challenge in its history.

“[Early cost control measures] have resulted in preserving cash and limiting the net loss of the first half to acceptable levels, while still being able to mobilise people during this intricate time and support repatriation efforts.”

He added: “The prospects of the global aviation industry remain strong and will continue to play a vital role in the global economic recovery. While we started to see gradual opening of selective markets around the world, it is now clear that Covid-19 will continue to have a lasting impact on the aviation industry and the path to recovery is expected to be gradual.”

Air Arabia’s joint venture with Etihad Airways, Air Arabia Abu Dhabi, began operating recently as the UAE’s latest budget airline.

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