Low cost carrier Air Arabia posted a 14.6 percent drop in first-quarter net profit on Wednesday as rising fuel costs continue to challenge regional carriers.
Air Arabia earned a net profit of AED42.7 million dirhams (USD$11.63 million) for the first-quarter of 2011, down from AED50 million it reported during the same period in 2010, it said in a statement.
Revenue rose to AED513 million dirhams for the quarter, compared with AED482 million in the year-before period, it said in a statement to the Dubai bourse.
"Though the region has clearly shown positive signs indicating the emergence from the more serious effects of the global financial downturn, the rise in fuel costs continues to challenge regional carriers," Sheikh Abdullah Bin Mohammad Al Thani, Air Arabia's chairman said in a press statement.
AlembicHC cut its share-price target on Air Arabia in March and forecast a 5 percent drop in the low cost carrier's 2011 profit citing rising fuel prices.
The airline said it carried 1.2 million passengers in the first quarter, an increase of 11 per cent compared with 1.03 million passengers in the same period last year.
Average seat load factor stood at 85 percent, an increase of 6 percentage points.
Air Arabia will receive four more Airbus A320 aircraft this year out of the 44 it has ordered from Airbus.