Flydubai, Dubai's low-cost carrier which signed last year an expanded codeshare agreement with sister airline Emirates, reported an 18 per cent rise in net profit as it flew a record number of passengers.
The airline's tie-up with Emirates and a refreshed fleet is expected to continue to drive growth in 2018.
Net profit for 2017 increased to Dh37.3 million from Dh31.6m in 2016, while total revenues increased 9.2 per cent to Dh5.5 billion compared to Dh5bn the previous year.
It carried 10.9 million passengers in 2017 – a record number for the airline – and passenger numbers grew by 5.5 per cent compared to the previous year.
"The oil price continues to shape the business landscape and it remains a fine balance between fares, yields and passenger growth," Flydubai chief executive Ghaith Al Ghaith said in a statement announcing the results on Wednesday.
“Despite the socio-economic environment we have seen across our network, we have record numbers of passengers travelling with us as well as sustained growth in our revenue.”
Flydubai, which competes with Sharjah's no-frills carrier Air Arabia, is recovering from its weak performance in 2016, when it reported a 68.6 per cent drop in net profit as currency volatility and rising competition hit the bottom lines of airlines. Last May, Emirates reported an 82 per cent drop in annual net profit for 2016.
Rival Air Arabia, the region's first low-cost carrier, posted a 30 per cent rise in earnings last year along with growth across its operations.
Flydubai is banking on growth and it signed the largest aircraft order in its history with manufacturer Boeing last November, for 225 single-aisle 737 Max jets worth $27bn at list prices. The airline has a total 295 aircraft on order.
“The introduction of new and more fuel-efficient aircraft into our fleet will be a positive influence and we will see greater benefit as more Boeing 737 MAX 8 aircraft join the fleet,” said Mr Al Ghaith.
“We know how important aviation is to the business landscape and we remain confident about the road ahead.”
Flydubai expanded its network in the past nine months as part of its partnership with Emirates. The two carriers agreed in July to operate an “expanded” codeshare agreement with increased schedule alignment, fleet and network sharing to 240 destinations by 2022, as well as alignment of frequent flyer programmes. Their combined network so far includes more than 45 destinations.
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Read more:
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Flydubai launches two new routes from UAE to Europe
Aviation year in review: For regional airlines, 2017 proved a mixed lot
Emirates, Flydubai expand partnership further with 16 new codeshare routes
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"In its early stages, the partnership with Emirates has enjoyed a significant response from passengers who recognise the benefits of travelling around the world on a single ticket," Sheikh Ahmed bin Saeed, chairman of flydubai, said on Wednesday.
“As the opportunities presented by the codeshare progress, it will create new passenger flows going forward.”
This week's results display a "great set of numbers", said Saj Ahmad, chief analyst at StrategicAero Research. "Integration and collaboration with Emirates will further enhance the cross-feed of traffic between the two partners and it is very likely 2018 will be a year of solid results and growth into existing and new city pairs.
“Given the swathe of routes flydubai has opened to date, the fuel-efficient 737 MAXs will help the airline further expand and penetrate new markets deep inside Europe, putting it at a distinct competitive advantage compared to its Arabian rivals flying older, and much less efficient Airbus A320s, which sport less range and lower cabin seating capacity.”
The results also highlight the success of flydubai’s dual hybrid product offering such as a new business class cabin, which pulls in higher revenue-paying customers, he said.