Yield, cost pressures lead to flydubai 1H loss

A combination of yield pressure and seasonality were some of the factors behind hybrid carrier flydubai recording a loss of AED142 million ($38.8 million) for 1H 2017, the airline said.

Flydubai SVP-finance Arbind Kumar said the company was continuing to focus its efforts on three main areas—improvements in cost performance, network optimization and a broadening of its distribution channels—to improve the situation.

The Dubai-based airline traditionally has a stronger second half, he added: “Knowing that we have faced a similar seasonality and trend in previous years, we will move ahead cautiously, but strong in the knowledge that there remains much untapped opportunity. During the first six months of this year, we have seen pressure on both yield and cost.”

The airline did not disclose whether the loss figure was a net, pre-tax or EBITDA figure, but recorded a net loss of AED89.9 million for the same period last year. The result was made on total revenue of AED2.5 billion, up 9.9% on the same period in 2016.

Passenger numbers were up 10.5% at 5.4 million compared to the corresponding period last year. Business-class passenger numbers rose 22%. However, not all of flydubai’s aircraft have a business-class section and those that do have just 12 business seats and 162 in economy.

Capacity, measured in ASKs, rose 7.9%, while RPKs rose 18.9%. Flydubai is continuing to expand its network, notably to Russia, where it now serves 10 points (Dubai is a popular holiday location for Russians), together with other new destinations in Bangladesh, Georgia, Azerbaijan and Montenegro.

In the 1H, flydubai received the last two of its order for 54 Boeing 737-800s and the first of its 2013 order for 75 737 MAX 8s. The airline said it was scheduled to receive six MAX 8s by the end of the year, with service entry in 4Q.