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Air Arabia eyes expansion with new order and Abu Dhabi unit

While many carriers in the Middle East are adjusting to slowing growth environment, the pace of activity is rising at low-cost carrier Air Arabia.

The pan-Arabian operator is seeing profits and revenue are on the rise, the prospect of teaming up with Etihad on a new Abu Dhabi low-cost operation and is poised to seal a new aircraft order to meet its future growth.

"This year has been a good year for us as a group," explains group chief executive Adel Ali, during an interview with FlightGlobal at the recent Arab Air Carriers' Organisation AGM in Kuwait. Ali has led Air Arabia since it became the first low-cost operator in the region 16 years ago.

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Air Arabia took delivery of its first A321LR in April

Airbus

The airline's board will meet shortly to review the third quarter financial performance. It has already reported strong progress at the halfway stage. Net profits for the first six months of the year were up 47% at AED 338 million. That was based on revenue up a fifth and passenger numbers up 12% to 5.8 million, carried across its four bases

"The UAE has been very good," he notes. Air Arabia has bases in Sharjah and Ras al Khaimah. Ali also sees an improvement in Egypt as tourism returns to the country, where it has a base in Alexandria. "There is stability in Egypt," he says, noting the airline has increased aircraft based there from one to four.

"Morocco is doing well but we are starting to see the impact of the slowdown in Europe," he says. The airline has a base in Casablanca.

It is set to soon have a presence at a third UAE airport, following the announcement that in October that Etihad Airways' parent is aiming to tie up with Air Arabia to establish its own budget operator in Abu Dahbi.

Branded 'Air Arabia Abu Dhabi' the airline would be based in the UAE capital. The move echoes that of rival operator Emirates which formed a close co-operation with budget airline Flydubai, although the latter has emerged as a hybrid operator catering to business-class as well as economy customers.

At the time of the announcement no details were disclosed regarding fleet size, aircraft type or route network, nor a launch date for operations given.

"A lot of streams of work are going on," says Ali, who would not be drawn on the details for the project. "We hope early in the New Year to we be able to tell the public the route network." The airline has though distanced itself from reports the new joint venture will focus on routes to India - a market which Etihad co-operated with grounded Indian carrier Jet Airways.

Air Arabia is an all-Airbus narrowbody operator and has just taken delivery of its third A321LR. Three more will follow next to take its fleet to 57.

But the airline is closing in on its next aircraft order, reportedly covering more than 100 aircraft. "We are in negotiations for more aircraft," Ali says, noting a decision should be made by the end of the year or early next year.

Airbus is reportedly hoping to tie up a deal in time to announce an order at the Dubai air show later this month. Complicating Air Arabia's evaluations has been the grounding of Boeing's Max aircraft, which has already delayed the process. "We hope Boeing will be able to tell us more about their plans," he says.

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