Flydubai reported a 60 per cent drop in net profit in 2015, as the strong US dollar and a challenging trade environment weighed on earnings.
Flydubai has a 31 December year end unlike Emirates which reports the year to 31 March.
The low-cost carrier yesterday reported Dh100.7 million of profit in 2015, compared to Dh250m a year earlier. It generated Dh4.9 billion in revenues, reflecting an increase of 11 per cent over 2014. During the year flydubai carried 9.04 million passengers, an increase of 25 per cent over 2014.
It is a wafer thin profit margin. But (and not every report has noted this) EBITDAR reduced slightly compared to the previous year, but remained healthy at 20.5% of revenue. EBITDAR is an accounting proxy for cash flows.
The revenue per passenger figure of AEd542 is worth noting as well; basically usd150 per passenger. This figure is higher than reality since revenue includes some cargo revenues – though an LCC FlyDubai does maintain a cargo operation.
With full year revenue up just 11% while passenger numbers increased by 25% there is clear pressure in yields.
Revenue passenger kilometres, a measure calculated by multiplying the number of revenue-paying passengers by the distance travelled, was “under pressure”, the airline said. This was owing to a stronger dollar, a challenging trading environment and the suspension of flights on some routes.
“The overall trading environment has remained challenging, but we have maintained our growth story and ended the year positively,” said Ghaith Al Ghaith, the flydubai chief executive.
During the first half of 2015, flydubai reported a loss of Dh147.4m on the back of lower Russian demand and the suspension of flights to Iraq, Yemen and parts of Ukraine. Yet it turned around its performance in the second half of the year with a Dh248 million profit helped by lower fuel prices and efforts to manage costs.
As the price of crude oil slumped from US$114 per barrel almost two years ago to about $30 per barrel, flydubai, like other carriers, has benefited from the fuel discount.
Fuel costs fell to 30.3 per cent of its operating costs, with 59 per cent of fuel costs unhedged.
The carrier will start to receive 16 new aircraft from May phased over the following two years.
It also plans to retire seven aircraft to maintain a young fleet. Currently the discount carrier flies to 89 destinations in 43 countries.
“Our network is maturing and so we continue to monitor capacity and review the opportunities for existing routes as well as for new routes,” said Mr Ghaith.
There was no mention of the average load factor.
in support of its growing fleet flydubai staff numbers rose to a total of 3,393 including 658 pilots, 1,435 cabin crew and 273 engineers representing 114 nationalities.
This was Flydubai’s fourth profitable year in succession. The airline has connected Dubai to cities that had not previous access to the middle east’s premier business and travel hub.
The original mandate expected Flydubai to serve many second and third tier cities in India; but the airline’s access to India has been greatly restricted by the bilateral agreement between India and the UAE.
Instead FlyDubai has pioneered routes to smaller GCC cities, into Africa and into the Russia and FSU states. It remains a small, versatile and creative operation.