Air Arabia PJSC surged to the highest level in more than three years on investor optimism the Middle East’s biggest no-frills airline will benefit from Dubai’s tourism recovery.
The stock jumped 4.1 percent to 1.04 dirhams, the highest close since March 2010. That brought the surge this quarter to 34 percent. About 50.8 million shares traded, or 2.7 times the three-month daily average, making the stock the fourth-most traded on the benchmark DFM General Index. The measure was little changed.
Dubai plans to double the number of visitors to 20 million by 2020 and triple annual revenue from the industry to 300 billion dirhams ($82 billion), the government said. Air Arabia said last month first-quarter passenger traffic climbed 17.5 percent to a record 1.45 million. The carrier will take delivery of 10 planes next year and is looking into raising funds in 2014 for the aircrafts, Chief Executive Officer Adel Ali said in an interview today.
“Air Arabia is benefiting from the recovery in the tourism activity in Dubai,” said Walid Mourad, Dubai-based fund manager at ING Investment Management Middle East Ltd. “Their average revenue per passenger and load factor have been improving significantly.”
The company last year started flights to nine additional destinations from its hub in Sharjah, United Arab Emirates. That helped boost passenger numbers by 13 percent to 5.3 million in 2012 and profit by 56 percent. Goldman Sachs Group Inc. raised its price estimate for the airline in February to 1.14 dirhams.
Five analysts recommend investors buy the shares, according to data compiled by Bloomberg. Six have a hold rating on the stock and one advises selling it, the data show.
Editors: Claudia Maedler and Zahra Hankir.
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