Air Arabia profit falls on airspace squeeze

Air Arabia’s first-quarter profit fell 22 per cent as regional conflict disrupted flying, closed airspace and forced temporary operational limits, even as the Sharjah-based low-cost carrier kept revenue broadly stable and filled a higher share of available seats.

The carrier reported net profit of AED278 million for the three months ended 31 March 2026, down from AED355 million a year earlier. Turnover edged up 1 per cent to AED1.8 billion from AED1.779 billion, underlining the resilience of fares and ancillary revenue despite a fall in passenger numbers and a sharp reduction in capacity during March.

Air Arabia carried 4.7 million passengers across its hubs in the UAE, Morocco, Egypt and Pakistan during the quarter, compared with 4.9 million in the same period of 2025. Its seat load factor rose to 86 per cent from 84 per cent, indicating that demand remained strong where flights operated, but network disruption limited the airline’s ability to convert that demand into higher traffic.

The results show the pressure facing Gulf aviation after conflict in the region forced carriers to redraw schedules, cancel services and avoid affected airspace. The disruption was particularly damaging for operators whose networks depend on short- and medium-haul connectivity across the Middle East, South Asia, North Africa and Europe. Higher fuel burn from rerouting, weaker aircraft utilisation and crew scheduling complications have added to cost pressures.

Sheikh Abdullah Bin Mohammad Al Thani, chairman of Air Arabia, said the quarter was marked by airspace restrictions and operational disruption, but the airline had shown “strong resilience and agility” in responding to fast-changing conditions. He said capacity optimisation and operational continuity helped the company manage the impact during a difficult period.

Air Arabia’s performance also reflects the underlying strength of the low-cost model in a region where price-sensitive leisure and visiting-friends-and-relatives traffic remain important drivers of demand. The airline’s ability to lift its load factor while carrying fewer passengers suggests that reduced capacity helped support yields, although not enough to prevent a sizeable decline in earnings.

The company operated 90 owned and leased Airbus A320 and A321 aircraft during the quarter. Further aircraft deliveries are scheduled through the year under its existing Airbus order book, giving the carrier room to expand once airspace conditions and regional demand patterns stabilise. Its multi-hub structure, with operations spread beyond Sharjah, has helped diversify network exposure, though the wider Middle East disruption still weighed heavily on March operations.

Air Arabia has been expanding its network from the UAE and other hubs to strengthen its position against rival budget and hybrid carriers. Its Abu Dhabi joint venture added services to Amman’s city airport, while the group has also been building its European footprint, including flights to Rome from Sharjah. These additions show continued strategic focus on secondary airports and underserved routes, where low-cost operators can stimulate demand while keeping unit costs under control.

The broader operating environment remains uncertain. Airlines across the region are dealing with volatile fuel prices, supply-chain delays, aircraft delivery bottlenecks and heightened insurance and risk-management costs. Global passenger demand has continued to grow, but Middle East traffic has been distorted by cancelled and rerouted flights, making network planning less predictable than during the post-pandemic recovery phase.

Air Arabia entered 2026 from a position of financial strength after posting record full-year 2025 profit before tax of AED1.8 billion and turnover of AED7.78 billion. That earlier performance reflected robust passenger demand, disciplined cost control and steady network expansion. The first-quarter decline therefore appears less a demand problem than a disruption-driven hit to capacity and operating efficiency.

Management also pointed to fuel price volatility, inflationary costs and strain on global trade and logistics as continuing risks. Those pressures are particularly relevant for low-cost carriers, which rely on high aircraft utilisation, tight turnarounds and predictable route economics. Any prolonged airspace restrictions can undermine those advantages by increasing flying times, disrupting schedules and reducing the number of sectors each aircraft can operate.