Flydubai has returned to profitability despite the ongoing grounding of the 737 Max and has received compensation from Boeing. But the airline’s top brass remains frustrated that its growth strategy has been hampered by the Max crisis.
Flydubai made a profit of nearly $54 million in the year ending 31 December 2019 on the back of revenue of $1.6 billion, which was boosted by an undisclosed compensation sum.
14 of Flydubai’s 737 Max aircraft have been grounded since March 2019 and the jets will not return to service until the GCAA approves it for flight.
While Flydubai has agreed compensation with Boeing over the Max crisis, which has contributed to its 2019 financial results, the grounding resulted in 19% of the airline’s flying schedule being cancelled last year.
CEO Ghaith Al Ghaith, said that the airline had had to manage a number of “unprecedented issues” faced by the aviation industry.
“Our results demonstrate that we have capitalised on the strong fundamentals in our business, but it is regrettable that our growth strategy has been significantly impacted by the grounding of the Boeing 737 Max,” he said.
“Whilst 2019 has seen a return to profitability it does not reflect the loss of market position and the unfilled opportunities flydubai could have exploited.”
Al Ghaith said that while the compensation agreement with Boeing had contributed to 2019’s results, it can “in no way compensate for the loss of business opportunity or market share experienced by the airline”.
Francois Oberholzer, CFO at flydubai, said: “We have had to be even more flexible with the abrupt interruption of our growth and fleet strategy.
“Direct operating costs reduced by 17.8%, whilst we saw double digit growth in our yields minimising the reduction in revenue to 2.6% compared to a fall in capacity of 15.8%.
EBITDAR was reported at 29.5% of annual revenue compared to 21.1% in 2018. Ancillary revenues contributed to 8.9% of revenue compared to 9.4% in 2018.
Flydubai has leased a number of aircraft to increase its fleet capacity while the Max remains grounded. It operates a total of 45 NG 737-800s, including three leased from Smartwings.
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