Air Arabia eyes 100-jet order this year after record 2017 profit

Updated 07 March 2018

Air Arabia eyes 100-jet order this year after record 2017 profit

BENGALURU: Middle East budget carrier Air Arabia will add more destinations and could order around 100 narrow-body aircraft this year, thanks to rising demand in Egypt and other hubs, Chief Executive Adel Ali said on Wednesday.
The expansion from the United Arab Emirates’ only publicly listed airline comes amid rising oil prices and after a year in which Air Arabia’s profit increased 30 percent to a record 662 million dirhams ($180 million), as it flew more passengers and operated more routes.
The airline is considering placing new orders for the first time in several years to support future growth.
“It doesn’t necessarily have to be a purchase order. The leasing market is pretty good,” Ali said in an interview in the southern Indian city of Bengaluru.
In November, Air Arabia announced a leasing agreement for six Airbus A321neo long-range jets from US-based Air Lease Corp.
“Our technical team and financial team are working with both Boeing and Airbus,” Ali said.
The Sharjah-headquartered airline currently operates an all-Airbus A320 narrow-body fleet of around 50 jets.
Ali did not rule out a deal for CSeries jets made by Canada’s Bombardier, though suggested a preliminary agreement by an airline Air Arabia now partly owns was no longer valid.
Petra Airlines, in which Air Arabia bought a 49 percent stake three years ago, signed a letter of intent with Bombardier in 2014 to buy up to four CSeries jets in a deal worth up to $300 million at list prices.
“Petra as an airline was finished a long time ago. That’s history. Everything that was there is gone,” he said.
Petra was rebranded Air Arabia Jordan in 2015 with the opening of Air Arabia’s fourth hub in Amman.
Ali said Air Arabia would sharpen its focus on Egypt this year as demand increases.
“We see the tourists coming back, trade is coming back. We have slowed down in Egypt for some time now because of geopolitical and economic uncertainties. We now see certainty there,” he added.
The carrier also expects to grow in Russia and some former Soviet states this year. The 2018 FIFA World Cup will be held in Russia, which is expected to spur demand.
Air Arabia plans to add more routes in India, Ali said. The airline already operates a handful of routes in the country, a booming aviation market.

WEEKLY ENERGY RECAP: Keeping things in balance

Updated 08 December 2019

WEEKLY ENERGY RECAP: Keeping things in balance

  • The over-compliance will result in cuts of 1.7 million bpd

Brent crude rose above $64 per barrel after OPEC+ producers unanimously agreed to deepen output cuts by 503,000 barrels per day (bpd) to a total 1.7 million bpd till the end of the first quarter of 2020.

The breakdown is that OPEC producers are due to cut 372,000 bpd and non-OPEC producers to cut 131,000 bpd.

Current market dynamics led to this decision as oil price-positive news outweighed more bearish developments in the US-China trade narrative that has weighed on oil prices throughout the year, with US crude exports rising to a record 3.4 million bpd in October versus 3.1 million bpd in September.

OPEC November crude oil output levels at 29.8 million bpd show that producers were already overcomplying with its current 1.2 million bpd output cuts deal by around 400,000 bpd. 

The over-compliance will result in cuts of 1.7 million bpd, especially when Saudi Arabia continues to voluntarily cut more than its share.

This makes the agreed 1.7 million bpd output cuts pragmatic since it won’t taken any barrels out of the market.

It isn’t a matter of OPEC making room in the market for other additional supplies from non-OPEC sources, as OPEC barrels can’t be easily replaced.

Instead, this is about avoiding any oversupply that might damage the global supply-demand balance.

Saudi energy minister Prince Abdulaziz bin Salman has effectively kept his promise and managed to smoothly forge a consensus among OPEC and non-OPEC producers.

He has also successfully managed the 24-country coalition of OPEC+ including Russia in reaching an agreement.

Despite suggestions otherwise in recent coverage of the Vienna meeting, the deeper cuts announced on Friday have nothing to do with the Aramco IPO. Let’s remember this meeting was scheduled six months ago and the IPO has been in the works for much longer.

The Aramco share sale did not target a specific oil price. If that was a motivating factor it could easily have chosen another time.