The budget carrier flydubai expects this to be a tough year, but it plans to increase capacity in the GCC and expand business in eastern Europe and Africa, the chief executive said on Monday.
Flydubai last month posted a 60 per cent drop in last year’s net profit as tough market conditions, its fuel hedging policy and the stronger dollar hit the company’s earnings.
"[2016] is going to be another tough year because there are so many things outside the business's control that one has to be careful about," said Ghaith Al Ghaith, the chief executive of flydubai, in an interview at the Global Aerospace Summit in Abu Dhabi.
“Last year, although we dropped our profit, we grew our passengers’ revenue by 30 per cent. It was what we call a bumper year.”
During the first half of 2015, flydubai struggled 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 to turn a full-year profit of Dh100.7 million, helped by lower fuel prices and efforts to manage costs.
“We used to get a lot of passengers from Russia”, but that reduced by 50 per cent, said Mr Al Ghaith. “This year you have to assume that because of all of these things around you, it is not going to be easy.”
Mr Al Ghaith said he was optimistic and that he expected many opportunities from the GCC, Europe and Africa. “There are still opportunities in the GCC areas that we are flying to. There are opportunities to add capacity. We fly to 14 points in Saudi Arabia. We will probably add more capacity,” he said.
“We have a lot of opportunities in Europe and Africa. There is demand from eastern Europe for holidays in Dubai.”
Mr Al Ghaith also planned to change its strategy of not flying beyond a five-hour radius from its home base of Dubai. He said that his company was not planning to acquire other airlines.
“Our plan is to grow organically and not to grow outside the UAE,” he said.
Flydubai flies to 89 destinations in 43 countries. 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.
At the summit on Monday, Adel Ali, Air Arabia chief executive, said the budget airline is focused on increasing passenger numbers as it pursues its strategy of greater scale across the Middle East and North Africa.
“I think we are very happy with double-digit [passenger] growth every year, which we have had for 12 years. We continued our focus on expansion and making sure we are profitable and those two things have happened,” he said.
The brand name “can fit in anywhere between Morocco and Muscat”, he said.
“We’ve got five hubs today and we hope that as the geopolitical environment settles in the Mena region, we would be able to develop more hubs and expand our business further.
“We are in a region that has more than a billion people surrounding it … and I suspect that the aviation industry is really in its infancy.”
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