Flydubai narrows H1 loss but warns of pressure from MAX grounding

A Boeing 737 MAX aircraft bearing the logo of Flydubai is parked at a Boeing production facility in Washington. (Reuters/File)
Updated 01 October 2019

Flydubai narrows H1 loss but warns of pressure from MAX grounding

  • Flydubai is one of the world’s biggest MAX customers with 14 planes from an order of 250

DUBAI: Flydubai warned on Monday of significant financial pressure from the unprecedented grounding of the Boeing 737 MAX as it reported a 196.7 million dirhams ($53.6 million) first-half loss.

The Dubai state-owned airline, one of the world’s biggest MAX customers with 14 planes from an order of 250, said it expected its fleet to shrink this year as it was unable to replace older aircraft.

Flydubai has largely stood by Boeing, which is facing one of the worst crises in its history, though the airline’s chairman said in April it could order jets from rival Airbus as replacements.

“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,” CEO Ghaith Al-Ghaith said in a statement.

The airline expects to have a fleet of 43 aircraft by the end of the year, fewer than the 62 it thought it would have prior to the grounding. Boeing’s top-selling jet was grounded worldwide in March following two fatal crashes in Ethiopia and Indonesia that killed 346 people within a span of five months.

Flydubai’s first-half loss was narrower than the 316.8 million dirhams it lost a year earlier, while the number of passengers carried was down 7.5 percent to 5 million.

The airline had previously said it expected to return to profitability this year after losing 160 million dirhams in 2018.

A cost efficiency program introduced at the start of the year had offset some of the impact of the MAX grounding, although it would not be able to fully cover it, it said.

“If the grounding continues until the end of the year, we expect our performance to continue to be impacted,” Ghaith said.

Flydubai said it had seen strong demand on its network at the start of the year.


Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 56 min 6 sec ago

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

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Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.