Flydubai posts record profit in 2023 fuelled by travel boom

Flydubai said it is "well positioned" to navigate the challenges of high fuel prices and supply-chain disruption after annual profit surged to its highest-ever levels in 2023 on a record number of passengers amid booming demand for air travel.

The sister airline of Emirates posted a record profit of Dh2.1 billion ($572 million), an jump of 75 per cent from the previous year, as revenue increased by nearly a quarter, flydubai said in a statement on Thursday.

Flydubai's total annual revenue in 2023 rose 23 per cent year-on-year to Dh11.2 billion.

The airline carried 13.8 million passengers from Dubai last year, an annual increase of 31 per cent, and set a record that exceeded its pre-pandemic level of 11 million.

"Building on the momentum from our previous strong performance, we continued to grow, surpassing all pre-pandemic levels to achieve the most profitable year in the history of the airline," said Ghaith Al Ghaith, flydubai's chief executive.

He highlighted the airline's strategy of connecting underserved markets to Dubai.

This comes after Dubai International Airport surpassed its pre-coronavirus annual passenger traffic last year when it handled nearly 87 million passengers, a growth of 31.7 per cent year-on-year, as it edged past the 86.4 million recorded in 2019.

This is in line with Dubai achieving its best annual tourism performance last year when international arrivals to the emirate increased 19.4 per cent to 17.15 million. This exceeded the 16.73 million visitors in 2019, according to Dubai’s Department of Economy and Tourism.

Boeing delivery delays

Last year, flydubai added 13 new Boeing 737 aircraft to its fleet, increasing its capacity by 27 per cent to 40,292 million available seat kilometres, a measure of an airline’s seats multiplied by kilometres flown.

Flydubai ended 2023 with 84 aircraft, including 29 Boeing 737-800s, 52 737 Max 8s and three 737 Max 9 jets. Three Boeing 737-800 planes were returned to the lessors at the end of their lease agreement.

"Ongoing challenges with the aircraft manufacturer’s delivery schedule have resulted in four fewer aircraft being delivered in 2023," flydubai said.

Boeing has faced handover delays of its Max model amid production glitches and supply chain problems.

To mitigate the delays in aircraft deliveries, meet the surge in travel demand and add capacity during peak travel periods, flydubai entered an agreement with Smartwings for six wet-leased aircraft.

A wet-lease arrangement is one in which the plane lessor maintains operational control of flights while providing aircraft and crew.

The airline also expanded its route network last year, launching 17 destinations and ending 2023 with a network of 122 destinations in 52 countries.

Flydubai recorded a 56 per cent year-on-year rise in passenger numbers on its GCC network and a 36 per cent increase in Europe.

Through flydubai's six-year codeshare partnership with Emirates, the airlines carried 3.7 million passengers in 2023 across their joint network of 222 destinations.

To meet enhanced operations, flydubai’s workforce reached 5,545 employees with more than 1,000 new staff joining in 2023 across various departments.

About 73 per cent of the new recruits were pilots, cabin crew and engineers.

Outlook for 2024

Flydubai's forward planning and strong financial position "make us well-positioned to successfully navigate through persisting challenges including elevated fuel prices, disruption to the industry’s supply chains, rising global inflation, softening yield margins and ongoing geopolitical uncertainties", Mr Al Ghaith said.

Fuel continues to be the single highest operating cost for the airline, accounting for 32 per cent of total annual costs, due to elevated prices, the airline said.

"The airline continues to explore fuel-hedging options and last year it hedged 12 per cent of its fuel requirement," it said.

Flydubai will take delivery of 12 Boeing 737 Max aircraft in 2024 to add capacity on existing routes as demand for travel across the network returns to pre-pandemic levels, Mr Al Ghaith said.

"This year will see more investment in technologies across the business and the retrofitting of our fleet of next-generation Boeing 737 aircraft to provide a more cohesive customer experience," he added.