The budget airline flydubai has reported a first-half loss of $53.6 million (AED 196.7 million) with the carrier’s chief executive, Ghaith Al Ghaith pegging the blame on the worldwide grounding of Boeing 737MAX aircraft. flydubai currently has 14 Boeing 737MAX8 aircraft in its fleet and three of the slightly larger 737MAX9 variant. The grounding has effectively knocked out over 27 per cent of flydubai’s fleet.
Al Ghaith said the airline had started the year “cautiously optimistic” and had seen “positive results” as flydubai’s rapidly expanding route network slowly matures. flydubai reported strong demand across the network in the first few months of the year but has been “significantly impacted” following the GCAA’s decision to ground 737MAX aircraft on the 13th March.
That decision to ground the aircraft type followed two fatal crashes of 737MAX planes in less than six months in which a total of 346 people were killed. Aviation regulators in the United States hope to clear the 737MAX for a return to service by the end of this year but the head of the UAE’s General Civil Aviation Authority says it’s unlikely to follow suit until early next year.
flydubai’s chief financial officer, Francois Oberholzer says a cost-cutting programme has been effective but that this could never have “offset” the impact felt by the 737MAX grounding. The airline has also been helped by a 17 per cent drop in fuel costs during the period compared to 2018.
Commenting on today’s news, Ghaith Al Ghaith said:
“In our 10th Anniversary year, we had expected to grow our fleet and continue with our plans to expand our network. Without any deliveries of new aircraft and no visibility of the timelines, we will see our operating fleet reduce in size to what it was in 2014. This is disappointing.
We are in ongoing discussions with Boeing, as our long-standing partner, to resolve the unprecedented nature of this grounding and the significant impact it has had on our business and growth strategy. If the grounding continues until the end of the year we expect our performance to continue to be impacted.”
Despite the poor financial performance in the first half of this year, it still represents a 30 per cent improvement on the losses flydubai made in the first six months of 2018.
In late 2017, the government-owned carrier announced a major tie-up with Emirates. Rather than merging, the two airlines announced a mutually beneficial partnership that would open up new markets and opportunities. Both flydubai and Emirates say the partnership has so far worked well and as a result, flydubai has suspended its plan to move all operations to Dubai World Central airport.
flydubai now serves just shy of 100 destinations in around 44 countries – 67 of which were previously underserved markets. In 2017, the airline announced a massive $27 billion deal for up to 225 Boeing 737 MAX aircraft. The airline is expected to take delivery of around 70 new aircraft by 2023.
While flydubai has been suffering, all Airbus-operator Air Arabia which is based in neighbouring Sharjah reported a profit of AED 210 million for the first half of 2019. Air Arabia is the UAE’s only privately run airline and has expanded to operate out of four hubs in the UAE, Morrocco and Egypt.