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DUBAI, MAY 6 - UAE budget carrier Air Arabia said quarterly net profit rose 11.7 percent, beating analysts’ forecasts, as a hike in fuel costs was offset by a rise in number of passengers seeking low-cost flying options.
Air Arabia earned a net profit of 47.7 million dirhams ($13 million) for the first-quarter, it said in a statement on Sunday, compared with 42.7 million dirhams profit a year earlier.
Revenues for the quarter was 621 million dirhams, an increase of 21 percent to the 513 million dirhams it posted in the same period of 2011.
The earnings beat forecasts by two analysts, who had expected an average net profit of 37.45 million dirhams for the quarter in a Reuters poll.
The carrier said a demand for low-cost transport in the region helped the airline get past the impact of rising fuel costs that has forced may airlines to hike ticket costs.
“Though political instability and sustained high fuel costs continue to challenge regional carriers, the appeal of air transport, and especially the low-cost model pioneered by Air Arabia in the region, remains strong,” said Sheikh Abdullah Bin Mohammad Al Thani, chairman of Air Arabia.
Dubai’s Emriates, one of the world’s top airlines, said last week that fuel charges were about $2 billion in 2011, accounting for 40-43 percent of the airline’s costs. Emirates is expected to report its earlier later this month.
The emirate’s budget carrier flydubai also plans to increase ticket costs.
Air Arabia, headquartered in the emirate of Sharjah, also has hubs in Egypt and Morocco. It competes with regional low cost carriers such as flydubai and Kuwait’s Jazeera Airways .
The company has earlier announced a 6 percent cash dividend for shareholders. Air Arabia shares closed 2.5 percent lower on the Dubai bourse Sunday prior to the results. ($1 = 3.6730 UAE dirhams) (Reporting by Praveen Menon; Editing by Dinesh Nair)