LCC flydubai saw its first-half loss more than double compared to the same period in 2017, caused by a combination of sharply higher fuel prices and a “challenging” economic and geopolitical climate.

The airline reported a loss of AED316.8 million ($86.3 million) for the six months to June 30, widened from a loss of AED142 million a year ago. Traditionally, flydubai does not specify whether this figure is net, pre-tax or EBITDA.

The carrier said that oil prices—up 35% on a year ago—had resulted in increased costs of AED175 million, which would account for more than half of its loss. 

As a result of the higher prices, fuel accounted for 29.2% of flydubai’s total operating costs, compared to 24.8% for the same period last year.

The increased loss came despite revenue increasing by 10.4% to AED 2.8 billion over the year-ago figure. Passenger numbers were static at 5.4 million. The airline said the region’s economic and geopolitical situation had dampened demand for travel.

Among the financial indicators, there was a drop in the amount earned by ancillary revenue, which accounted for 11% of turnover compared to 14.6% last time.

Given the tougher operating climate, flydubai said it had conducted a thorough route review of its network, which had led to 10 destinations being cut, to be replaced by the same number of new routes.

CEO Ghaith Al Ghaith said the tough trading environment meant the half-year results reflected “these short-term challenges. We continue, however, to invest in our fleet, network and operations, recognizing opportunity as we look to the future.”

In the second half of the year, “Pricing stability at the current level is also likely to stimulate demand for regional travel.”

Flydubai SVP-finance Arbind Kumar added: “The stronger dollar, rising oil price and higher interest rates are expected to continue to impact our performance and we will need to maintain a tight grip on the deployment of our capacity.”

The increasingly close cooperation between flydubai and fellow Dubai carrier Emirates Airline can be seen in flights to the Croatian capital, Zagreb. The codeshare between the two airlines will see flydubai operate the route with its Boeing 737-800s or MAX 8s over the winter season, while Emirates will place a larger aircraft on the sector over the summer.

Alan Dron