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Research and Innovation

REPORT: : What you need to know August 2021

This report presents a roundup of what’s been happening to airlines in the Middle East over the last month.

Major carriers Extra U.K. flights added Emirates restarted service to Glasgow, with four weekly flights from August 11. Newcastle will be served with the same frequency from October 15. Emirates is also increasing frequency on existing services to Birmingham, Barcelona, , , Hamburg, Lisbon, , , Munich, and Zurich. First half losses reduced A sharp reduction in costs combined with a recovery in demand helped Etihad Airways halve core operating losses to US$400 million during the first six months of 2021. At the EBITDA (earnings before interest, tax, depreciation and amortization) level, the reversed last year’s $100 million loss to record a $100 million profit. During the first half of 2021, passenger revenues fell by 68% year-over-year to $300 million, although a surge in cargo revenue to $800 million helped to offset some of this. More U.K. flights Following the U.A.E.’s removal from the U.K.’s red travel list, Etihad Airways resumed thrice-daily passengers flights from to London Heathrow and daily flights to Manchester on August 8. Airways New African service launched has started a new service to Harare in Zimbabwe as a tag on its existing thrice-weekly operation to Zambian capital Lusaka. July performance reported Turkish Airlines carried 5.5 million passengers in July, 23% lower than the 7.1 million caried in July 2019. On domestic routes, numbers fell 7% to 2.7 million. The decline in international traffic was much deeper, falling 34% to 2.8 million. Compared to 2019 levels, the airline cut available seat kilometer capacity by 20%, but with traffic falling by 31%, Turkish saw its load factor decline by 12 percentage points to 71%. Strong revenues spark income improvement Turkish Airlines increased revenues by 142% year-over-year to $2.17 billion for the second quarter of 2021. Passenger revenue rose by 908% to $1.15 billion, with cargo revenue up 26% to $941 million. After swinging from 2020’s $140 million operating loss to a $159 million profit, the airline managed to narrow its net loss from $327 million to $62 million.

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During the second quarter, Turkish returned capacity to 56% of its 2019 level – 62% on domestic routes and 55% on international. Domestic passengers reached 49% of their pre-pandemic level, international 41%, with total passengers at 44%.

Other airlines Profits return U.A.E.-based low-cost carrier Air Arabia reported a Dhs10 million (US$2.72 million) net profit for the second quarter of 2021, having recorded a net loss in the same quarter last year. Revenue increased from Dhs120 million to Dhs496 million. The airline carried 940,000 passengers across its five hubs. London service resumes Kazakh carrier Air Astana will resume direct flights to London Heathrow from Kazakhstan’s capital city Nur - Sultan from September 18. Services will initially operate twice-weekly. Losses reduced El Al posted a US$166 million net loss for the first half of 2021, improving on the $244 million loss reported for the same period in 2020. Revenues, however, were 28% lower at $339 million. There were encouraging signs in the second quarter, as passenger traffic increased fivefold over first quarter levels. More European services resume From August 8, Bahraini Gulf Air resumed twice-daily flights from Manama to London Heathrow. The move followed Bahrain’s upgrading from red to amber on the U.K.’s safe travel list. On August 14, Gulf Air also resumed flights to Moscow Domodedovo, initially on a twice-weekly basis. Pegasus Second half recovery expected Turkish low-cost carrier Pegasus saw first half losses deepen to TL1.6 billion (US$188 million) from TL1.3 billion in 2020, even though sales rose from TL2 billion to TL2.6 billion. But the airline expects a swift recovery in the second half of 2021, with capacity expected to be slightly above pre-COVID-019 levels in the next 12 months.

Note The information presented in this report represents the latest view as at August 31, 2021. We have carefully researched and checked the information contained. However, we do not guarantee or warrant the correctness, completeness or topicality of this article and do not accept any liability for any damage or loss as a result of the use of the information contained within this article.

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Airlines – Middle East | August 31, 2021 | Page 2