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Flydubai announces second-half profit of AED 157 million

Posted 20 February 2019 · Add Comment

Flydubai has announced its financial results for the reporting period ending 31 December 2018.

 

Ghaith Al Ghaith, chief executive officer of flydubai, said: “In line with expectations 2018 was a challenging year however we have continued to invest in our capacity and increased revenue.  We optimised our network by increasing flight frequencies on existing routes and adding new routes and as they become established they will support our further growth.”

Francois Oberholzer, chief financial officer of flydubai, said: “Our performance in 2018 was impacted largely due to increasing fuel costs, rising interest rates and unfavourable currency exchange movements.  Following our Half-Year Results, we continued to focus on further efficiency programmes across the business and these have resulted in a better second half.  The emphasis we have put on these programmes is expected to result in an improvement to our financial performance.”

Cost and revenue performance

    EBITDAR (1) was reported at 21.1% of annual revenue.

    Closing cash and cash equivalents position, including pre-delivery payments for future aircraft deliveries, is AED 2.1 billion compared to AED 2.4 billion last year.

    Fuel costs were 29.8 % of total annual operating costs; compared to 25% for the same period as last year.  Rising fuel costs have impacted performance and this is reflected by the proportionately higher increase in total operating costs compared to capacity increase. Total operating cost includes a price impact of AED 411 million (USD 112 million) due to a 31% increase in the Average Brent Crude Oil prices over the same period last year.

    Yield: there was an improvement in yield by 8.4% over the same period in the previous year. Volatility in fuel prices coupled with global geo-political developments and its effect on demand for international air travel is expected to keep some pressure on yields and passenger numbers in the near to-medium term.

    Ancillary revenue comprising baggage, cargo and inflight sales contributed 9.4% of revenue compared to 11.9% last year. Fare bundling has contributed to overall revenue growth but is reflected in the lower contribution to ancillary revenue.

    Financing: During 2018, the airline closed two financing structures to support the delivery of four Boeing 737 MAX 8 aircraft and three Boeing 737 MAX 9 aircraft through the Japanese Operating Lease with a Call Option (JOLCO) as well as sale and leaseback structure. The airline continues to see strong appetite for the financing of this fuel efficient narrow-body aircraft. It expects to continue to finance future deliveries using the structures presently available as well as new financing structures at competitive pricing levels that support the requirements of the airline.

 

In addition, flydubai has also secured a financing facility through a consortium of commercial banks with a tenure of 10 years to support the construction of its new headquarters due for completion in the first half of 2020.

 

Operational performance

 

    Fleet management: in line with its ongoing fleet management programme seven Boeing 737 MAX 8 and MAX 9 aircraft were delivered to the airline and four Next-Generation Boeing 737-800 aircraft, at the end of their operating lease, were taken out of service.

    Sustained network expansion: flydubai launched flights to four new markets and for the first time saw the start of year-round operations to Catania, Helsinki and Krakow as well as a summer seasonal operation to Dubrovnik. As a result of strong demand in previous years, flydubai operated a number of flights to seasonal summer destinations including Batumi and Tivat.

        flydubai contributed 31% of the total growth at Dubai Airports for Europe, contributing 6% of overall traffic to the region, up by 1% from the same period last year.

        flydubai increased the number of passengers carried from Bulgaria by 56%, from Romania by 45%, from Russia by 42%, from Serbia by 35% and Ukraine by 2%.

        flydubai accounted for 43% of the increase in passengers travelling between Dubai and Russia and the airline’s share of the whole market between Dubai and Russia was 23.8% in 2018; up by 3.7% from the previous year.

        flydubai increased the number of passengers carried from five points on its network in Pakistan by 13%. The airline’s share of the whole market between Dubai and Pakistan is up to 24.2% and in 2018 the airline carried over 1 million passengers.

        flydubai increased the number of passengers carried from Bahrain by 14%, from Kuwait by 6% and from Oman by 4%.

        flydubai’s share of the whole market between Dubai and India remained steady at 4%.

        Business Class passengers increased from Africa by 49%, from the Caucasus from 78% and Europe by 30%.

    Terminal 3: flydubai started operations to 11 destinations at Terminal 3, Dubai International as a next step in the codeshare partnership with Emirates to optimise connectivity for passengers.

 

Key Results

 

 

           

 

31 December 2018

           

 

 31 December 2017

 

RPKM (2) (% growth)

           

 

3.8%

           

 

12.7%

 

ASKM (3) (million)

           

 

30,167

           

 

27,851

 

Passenger numbers (million)

           

 

11.0

           

 

10.9

 

Fleet size (no. of aircraft)

           

 

64

           

 

61

 

Average aircraft age

           

 

3 years 8 months

           

 

3 years 11 months

 

flydubai’s share of traffic at Dubai Airports

           

 

12.2%

           

 

12.3%

 

Aircraft Utilisation – average block hours per aircraft per day

           

 

13.2

           

 

13.3

 

Total Departures

           

 

89,157

           

 

86,013

 

Morning Push

 

On time <30 minutes

           

 

92.6%

           

 

90.9%

 

Departure

 

On time <30 minutes

           

 

88.2%

           

 

85.8%

 

Arrival

 

On time <30 minutes

           

 

87.3%

           

 

85.1%

 

Total staff numbers

           

 

4,080

           

 

4,016

 

 

 

Outlook for 2019

 

A growing fleet: during the course of the year ahead, flydubai will see, for the first time, three Boeing 737 MAX 9 aircraft commence operations from February 2019.  In 2019, seven Boeing 737 MAX 8 aircraft will join the fleet. Nine Next-Generation Boeing 737-800 aircraft will be returned to the lessors at the end of their operating lease.

 

Network expansion and codeshare partnership: flydubai has announced the launch of operations to four new destinations: Kozhikode which launched on 01 February, Tashkent which will be launched on 11 March, Naples on 04 June, Budapest on 27 June and the airline restarted operations to Chittagong on 20 January and operations will resume to Hofuf from 16 March. These destinations will operate as part of the expanded codeshare with Emirates and their combined network is on track to reach 240 destinations by 2022.  As the second year of the codeshare with Emirates starts, the partnership will continue to deliver benefits for customers as the partnership matures and becomes stronger.

 

Southern Runway Repair (SRR): between 16 April and 30 May 2019 flydubai will operate flights to 41 destinations from DWC during the period of the refurbishment project to ensure minimum disruption to passengers’ travel plans.

 

Landmark Debut Sukuk: flydubai’s USD 500 million 5-year Sukuk, issued in November 2014, is due to reach maturity in November 2019.  New facilities, including the refinancing of the Sukuk, are currently being reviewed.

 

Ghaith Al Ghaith, looking ahead to 2019, said: “As we go into 2019 we are cautious but we remain confident in the knowledge that there remains much untapped opportunity and demand for travel across our network. In the year that we will celebrate our 10th anniversary we will push ahead with our strategy and we remain focused on our business model.  Our priorities are to grow the airline sustainably, open up previously underserved markets, invest in our fleet and our cabins to offer our passengers the latest innovations on board and a better travel experience.”

 

Analyst Saj Ahmad commented: “Flydubai's performance highlights the evolution of the competitive landscape around the GCC and with its traditionally stronger second half of the year forging ahead, the airline is well placed to start this year on a more robust footing.

 

“While revenues were up over 12% over the same time a year ago, passenger growth was modest, highlighting the ever growing choices and competition - crucially, flydubai's strong yield growth up over 8% demonstrates that the airline is making more money per seat than before.

 

“This is driven by its unique hybrid dual-class cabin offerings where it's business class suite aboard it's new 737 MAx fleet has been a real hit with passengers.

 

“Despite the sharp 5% rise in fuel costs to 30%, flydubai's induction of the new fuel efficient 737MAX will aid the longer term strategy of suppressing operational costs while expanding its network."

 

Ahmad added: “Flydubai's integration with Emirates will further bolster it's financial muscle in the coming year as it reaps the benefits of better interline connections at Terminal Three while harnessing higher fare paying passengers from Emirates' network.”

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