Flydubai cuts losses by nearly 40% as it grapples with 737 MAX grounding

Half-year results show steady revenues as airline deals with reduction in capacity and passengers following MAX ban
Boeing's 737 MAX grounding has significantly impacted on airlines' capacities.
Boeing's 737 MAX grounding has significantly impacted on airlines' capacities.

Flydubai reduced its losses by 38% down to $54 million (AED 197 million) in the first half of 2019 as it aims to claw back a shortfall impacted by the grounding of Boeing’s 737 MAX in March.

The company’s six-month results for the period ending 30 June 2019, showed revenues were steady, at $759 million, compared to the same time last year.      

Passenger numbers fell to five million – down 7.5% – during the first six months of the year, as a result of the reduction in the airline’s capacity.

Ghaith Al Ghaith, CEO at flydubai, said that the company was “cautiously optimistic” at the start of 2019, prior to the pair of 737 MAX crashes in March. 

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“We had seen positive results as our routes matured and during the first few months of the year we saw strong demand across the network. 

“Our performance has however been significantly impacted by the grounding of the Boeing 737 MAX aircraft and our Half-Year Results are not representative of what we had expected to report; we were expecting a significantly improved performance.”

Francois Oberholzer, CFO at the company, said: “In light of the grounding we have taken every effort to minimise flight cancellations and maximise revenue opportunities. 

“Unavoidably, this led to a reduction in ASKM by 14.9% which meant that we were not able to fully exploit demand opportunities. The cost efficiency programmes, we introduced at the beginning of the year, have yielded the planned benefits with the exception of the fuel efficiencies from the MAX deployment plan.

“These programmes were never intended nor could have offset the financial impact of the grounded Boeing 737 MAX aircraft.”

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During the first half of this year, flydubai launched flights to Kozhikode in India, Tashkent in Uzbekistan, Naples in Italy and Sochi in Russia, bringing the total number of destinations on its network to 92 destinations in 48 countries.

Ghaith added: “In our 10th anniversary year, we had expected to grow our fleet and continue with our plans to expand our network. Without any deliveries of new aircraft and no visibility of the timelines, we will see our operating fleet reduce in size to what it was in 2014. 

“This is disappointing. We are in ongoing discussions with Boeing, as our long-standing partner, to resolve the unprecedented nature of this grounding and the significant impact it has had on our business and growth strategy. If the grounding continues until the end of the year we expect our performance to continue to be impacted.” 

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