Air Arabia Jumps as Outlook Boosts Dividend Bets: Dubai Mover

Air Arabia PJSC rose to the highest level in almost three years on bets improved full-year profit may prompt the Middle East’s biggest no-frills airline to pay a bigger dividend.

Shares of the carrier rose 3.3 percent to 93 fils, the strongest since May 2010, on volume of almost five times the three-month daily average, at the close in Dubai. The stock was the biggest gainer and most traded on Dubai’s benchmark DFM General Index, which fell 0.1 percent.

Air Arabia, which competes with Dubai state-owned FlyDubai, said last week 2012 passengers rose 13 percent to a record 5.3 million. The airline started flights to nine new destinations from its hub in Sharjah, United Arab Emirates, including Basra and Erbil in Iraq, and Ufa and Kazan in Russia last year. Its 2012 profit probably jumped 50 percent, according to the average estimate of eight analysts compiled by Bloomberg.

“Investors are happy with expected results for 2012 and anticipate the company to increase cash dividends,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “The outlook is still positive with further revenue growth from overseas expansion and improved economic growth.”

Air Arabia, which said yesterday its board will meet this week to disclose results, last year raised its 2011 payout to 6 fils a share from a proposed 4.5 fils. The stock has 12-month dividend yield of 6.5 percent, compared with 6 percent for Ryanair Holdings Plc, Europe’s largest low-cost carrier.

Passenger traffic at Sharjah International Airport rose 13 in 2012, according to data on its website. Air Arabia may open a hub in India, Chief Executive Officer Adel Ali said in October.

The airline’s shares advanced 42 percent in 2012, outpacing a gain of 20 percent for the DFM. Five analysts recommend investors buy the shares of Air Arabia, while six have a hold rating on the stock and one says to sell, according to data compiled by Bloomberg.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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