Flydubai, the second-biggest customer for Boeing Co.’s grounded 737 Max jetliner, warned that its operations will shrink to 2014 levels if the model doesn’t return to service soon.
With the Max idled since March after two fatal crashes and leased planes due to be returned to their owners as contracts expire, Flydubai has gone from rapid expansion to a severely reduced network and mounting losses, Chief Executive Officer Ghaith Al Ghaith said Monday.
“Without any deliveries of new aircraft and no visibility of the timelines, we will see our operating fleet reduce in size to what it was in 2014,” Al Ghaith said in a statement after the sister carrier to long-haul giant Emirates reported a 197 million dirhams ($54 million) first-half loss.
Flydubai pulled 14 Max planes when the Max was grounded, and while Boeing reckons it will get the plane flying again this year, the United Arab Emirates aviation authority has said it doesn’t foresee a return before 2020. The airline, which has ordered 251 of the jets, is seeking compensation and suggested that it could switch to Airbus SE’s rival A320neo.
Passenger numbers dropped 7.5% in the half as capacity fell by twice that degree, exacerbated by the return to lessors of five aircraft, FlyDubai said. Another four will go back before the end of the year.
Flydubai is the latest carrier to highlight the strain the crisis surrounding the plane is placing on operations.
Southwest Airlines Co., the largest operator of the narrow-body workhorse, has said the grounding will cut $225 million from 2019 operating income, while American Airlines forecasts a $400 million drag.
Norwegian Air Shuttle ASA partly blamed the Max for its latest capital squeeze and a decision to terminate North American routes using narrow-bodies, while Ryanair Holdings Plc has slimmed down next summer’s timetable and is paring jobs as it waits on a high-density version of the plane.
Global revenue losses from grounding are likely to total $1.5 billion, assuming the Max returns to service by the end of the year, according to Atmosphere Research Group,
Flydubai’s first-half loss narrowed from 317 million dirhams a year earlier as the reduction in flights led fuel costs to ease by 17%.
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