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flydubai Swings to Full-Year Profit After Receiving Compensation Package from Boeing Over 737MAX Grounding

flydubai Swings to Full-Year Profit After Receiving Compensation Package from Boeing Over 737MAX Grounding

Dubai’s government-owned version of a budget airline, flydubai, has reported a return to a full-year profit for 2019 – in part because it received an interim compensation package from Boeing over the continued grounding of the 737MAX. For the 12-months from January to December 2019, flydubai reported a profit of $53.9 million on the back of $1.6 billion in revenue.

In comparison, in 2018 the airline reported a net loss of $43.5 million on the back of $1.7 billion in revenues.

Photo Credit: flydubai

flydubai is an all Boeing 737 operator and has a total of 175 Boeing 737MAX aircraft on order at a list value of $27 billion. The airline had taken delivery of 11 MAX8 aircraft and 3 of the slightly longer MAX9 models before the aircraft type was grounded worldwide early last year.

Ghaith Al Ghaith, flydubai’s chief executive said the confidential compensation package had helped to push flydubai into a full-year profit but that it could not make up for lost market share.

“This agreement has contributed towards this year’s results, but in no way can it compensate for the loss of business opportunity or market share experienced by the airline,” Al Ghaith explained.

Hinting that a further multi-million dollar compensation payment is expected, Al Ghaith continued: “Discussions are continuing between the parties regarding the ongoing impact of the grounding.”

flydubai has slashed its schedule by up to 19 per cent because of the MAX groundings and has been forced to lease up to four aircraft to operate some of its schedule. The airline did not give an estimate of when it expects the MAX aircraft to receive regulatory approval from the UAE civil aviation authorities to fly again.

Francois Oberholzer, flydubai’s chief financial officer, said the airline reduced costs by nearly 18 per cent over the course of 2019. He did not specify how much this was down to the 737MAX being grounded or other cost reduction programmes implemented throughout the year.

In the last couple of years, flydubai has pursued a partnership with Emirates airline that is says goes far beyond a mere codesharing agreement. However, flydubai recently denied reports it planned to save further costs by sharing staff between the two airlines.

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