Air Arabia reported 1Q18 results, with pre-minority earnings at AED110mn, up 8% Y-o-Y on revenue growth, broadly in line with our estimate (+2% vs. EFGe). Revenues grew 8% Y-o-Y to AED877mn and were also largely in line with our estimate (+4% vs. EFGe). Passenger traffic figures were down to c2.0mn during the quarter vs. c2.1mn a year ago (average seat factor of 80%). Accordingly, we estimate yields were up in the quarter from a low base in 1Q17 (-15% Y-o-Y then). 
 
The airline added three new routes to and from its hubs in the UAE and Egypt during 1Q18 (total routes 143), with flights commencing from Sharjah to Moscow’s Sheremetyevo Airport and to Jeddah and Kuwait from Sohag in Egypt. It is planning to add new flights from Sharjah to Qabala in Azerbaijan and to Izmir and Bodrum in Turkey staring Jun 2018 and added a route to Grozny in Russia in Apr 2018. 

Hatem Alaa, Nada Amin
 
Air Arabia (DU): AED1.18 as of 9 May 2018, Rating: Buy, TP: AED1.65/share, MCap: USD1,501mn, AIRARABI UH/AIRA.DU