Air Arabia to seek state aid, delay launch of low-cost carrier

Abu Dhabi

AIR Arabia PJSC has joined airlines globally in seeking state support and plans to delay the launch of a new low-cost carrier as the Covid-19 outbreak continues to wreak havoc on the aviation industry, according to people familiar with the matter.

The airline has asked the United Arab Emirates government for financial assistance, said the people, who asked not to be identified as the matter hasn't been made public. Details of the magnitude of the package haven't been disclosed.

Air Arabia Abu Dhabi, a joint venture with Etihad Airways slated to start flying by the end of June, has been put on hold, said the people. The two airlines intend to revive the plan when demand for global travel recovers from the impact of the pandemic, they said.

Air Arabia declined to comment, while Etihad didn't immediately respond to a request for comment. The UAE government referred questions to authorities in the city of Sharjah, where Air Arabia is based. They couldn't be reached outside business hours.

Airlines have been hit with an unprecedented near-total shutdown of travel as the coronavirus crisis sweeps across continents and governments close borders and order populations to stay at home. About 70 per cent of global carrier capacity is idled and the industry could burn through US$61 billion in the second quarter alone, according to the International Air Transport Association.

Emirates, the world's biggest long-haul airline, has already been promised support by Dubai, its owner.

Other carriers looking for government support include Deutsche Lufthansa AG and Air France-KLM.

Air Arabia operates a multi-hub business with bases in Morocco and Egypt as well as Sharjah. The carrier ordered 120 Airbus SE narrow-body jets worth about US$14 billion late last year to drive expansion into southeast Asia and Africa.

The shares have slumped 35 per cent this year, in line with a global aviation selloff. BLOOMBERG