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Flydubai narrows first half loss but warns of pressure from MAX grounding

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By Reuters
Flydubai narrows first half loss but warns of pressure from MAX grounding
FILE PHOTO: A Boeing 737 MAX aircraft bearing the logo of flydubai is parked at a Boeing production facility in Renton, Washington, U.S. March 11, 2019. REUTERS/David Ryder   -   Copyright  David Ryder(Reuters)

DUBAI (Reuters) – Flydubai warned on Monday of significant financial pressure from the unprecedented grounding of the Boeing <BA.N> 737 MAX as it reported a 196.7 million dirhams (£43.55 million) first half loss.

The Dubai state-owned airline, one of the world’s biggest MAX customers with 14 planes from an order of 250, said it expected its fleet to shrink this year as it was unable to replace older aircraft.

Flydubai has largely stood by Boeing, which is facing one of the worst crises in its history, though the airline’s chairman said in April it could order jets from rival Airbus <AIR.PA> as replacements.

“We are in ongoing discussions with Boeing, as our long-standing partner, to resolve the unprecedented nature of this grounding and the significant impact it has had on our business and growth strategy,” Chief Executive Ghaith al-Ghaith said in a statement.

The airline expects to have a fleet of 43 aircraft by the end of the year, fewer than the 62 it thought it would have prior to the grounding.

Boeing’s top-selling jet was grounded worldwide in March following two fatal crashes in Ethiopia and Indonesia that killed 346 people within a span of five months.

Flydubai’s first-half loss was narrower than the 316.8 million dirhams it lost a year earlier, while the number of passengers carried was down 7.5% to 5 million.

The airline had previously said it expected to return to profitability this year after losing 160 million dirhams in 2018.

A cost efficiency programme introduced at the start of the year had offset some of the impact of the MAX grounding, although it would not be able to fully cover it, it said.

“If the grounding continues until the end of the year we expect our performance to continue to be impacted,” Ghaith said.

Flydubai said it had seen strong demand on its network at the start of the year.

(Reporting by Alexander Cornwell; editing by Jason Neely and Kirsten Donovan)