Air Arabia PJSC surged to the highest level in almost five years as volume jumped after Goldman Sachs Group Inc. upgraded the Middle East’s biggest no- frills carrier to buy.

Shares of the airline jumped 5.1 percent to 1.23 dirhams, the strongest since October 2008, at the close in Dubai as volume increased to 122 million shares, 4.9 times the stock’s three-month daily average. Air Arabia was the biggest gainer in percentage terms on the benchmark DFM General Index, which rose 0.7 percent, taking an eight-day rally to 8.7 percent.

Air Arabia’s stock has advanced 7.9 percent in the two days since Goldman Sachs raised the shares to buy from neutral with a price estimate of 1.54 dirhams, a 25 percent premium to today’s closing price. Nine out of 13 analysts have a buy rating on the carrier, which is based in Sharjah, United Arab Emirates, according to data compiled by Bloomberg. The U.A.E. and Qatar were upgraded to emerging-market status last month by MSCI Inc.

Both the rating upgrade and the MSCI emerging-markets inclusion spurred the shares today, according to Amer Khan, a Dubai-based director at Shuaa Asset Management. Dubai’s bid to host the World Expo 2020 may be the next catalyst, which “would bode particularly well for the likes of Air Arabia,” he said.

Dubai plans to double the number of visitors to 20 million by 2020 and triple annual revenue from the industry to $82 billion (300 billion dirhams) amid an economic recovery, the government said in May.

Air Arabia’s first-quarter passenger traffic rose to a record 1.45 million, the airline said in April. The company said last month it plans to start flights to the capital of Armenia in August, the fifth new route in 2013 and its 86th globally from Sharjah, Egypt and Morocco.

The airline may post a 9 percent increase in full-year profit to 457 million dirhams, according to the mean estimate of eight analysts compiled by Bloomberg.

Editors: Daliah Merzaban and Zahra Hankir.

To contact the reporter on this story: Sherine El Madany in Dubai at To contact the editor responsible for this story: Claudia Maedler at

Photo Credit: Air Arabia jet sits at Paris Charles de Gaulle Airport. Aero Icarus / Flickr