COMPANY TO WATCH: AIR ARABIA/UAE
Air Arabia, the first low-cost carrier in the Middle East and North Africa, raised $700 million in its recent initial public offering, the largest IPO ever in the United Arab Emirates. The company’s shares will be listed on the Dubai Financial Market.
Air Arabia plans to use the proceeds from the offering to expand the size of its fleet from the current nine to at least 34 aircraft by 2016, as well as to invest in aircraft-maintenance infrastructure and establish new hubs in the Middle East and possibly India.
The company’s offering of 55% of its share capital attracted approximately 40,000 subscribers, including international financial institutions, according to Shuaa Capital, the lead manager. “At a time when Air Arabia is in full expansion mode, including more flights and destinations and new ancillary services, we are proud that our financial fundamentals remain on a strong upward trend,” says Adel Ali, CEO of the carrier, which was created in 2003 and began operating with two leased aircraft. The company’s profits tripled last year, and its average passenger load factor of 81.2% was higher than any other Middle East airline.
With its planned purchase of 25 additional aircraft, Air Arabia will be one of the largest operators of the Airbus A320 in the region.