Jazeera Airways inks $200M A320 financing

Jazeera Airways inks $200M A320 financing

Secured financing from NBK, some EU banks; Firm expects "record" profit in 2011; Carrier does not plan capital hike in next 3 years

October 25, 2011 6:38 by Reuters

Kuwait’s low-cost carrier Jazeera Airways has secured $200 million of financing to buy four Airbus A320 aircraft and expects record profits in 2011, its chairman said on Monday.

“By the end of 2011, Jazeera Airways would have completed its turnaround and covered all its losses,” Marwan Boodai told the Reuters Middle East Investment Summit in Kuwait.

The airline reported a full-year net loss of 2.8 million dinars in 2010, compared with a loss of 8.2 million dinars in 2009.

“Our plan is to get back to profitability, and now we have moved to a new plan which focuses on the regional points that we fly to,” Boodai said.

He added that the firm plans to carry 1.9 million passengers annually in the next three years, from 1.25 million passengers now.

Jazeera, which aims to fly 82 routes in the Middle East within the next five years, competes with United Arab Emirates-based Air Arabia and Dubai-based low-cost carrier flydubai.

The carrier does not plan another capital hike in the next three years, Boodai said, adding that Jazeera had scrapped plans to set up its own terminal.

Jazeera obtained shareholders’ approval last year to hike its capital by 20 million dinars ($72.5 million) to 42 million dinars, and the firm is currently working on the procedures for the hike, Boodai said.

Jazeera said in April that it would receive four new Airbus A320s between 2012 and 2014. The firm has 11 A320s in operation.

The carrier has secured $200 million financing for the four new aircraft from National Bank of Kuwait and several European banks, Boodai said.

The firm, which started flying to Cairo in May, now has a market share of 30 percent of flights from Kuwait to Cairo, Boodai said.

“There is a big movement between Kuwait and Cairo, and if the political situation was calmer, the numbers would have been much better, but the market is back to normal now,” he said.

The Arab world has been rocked by a wave of pro-democracy protests that has toppled the leaders of Egypt, Tunisia and Libya and sparked demonstrations in Bahrain, Kuwait, Oman, Syriaand Yemen.

Boodai said the number of passengers to Damascus, the capital of Syria, declined by 35 percent in the third quarter due to the current unrest.

Jazeera had ditched “small” markets such as Doha, Abu Dhabi and Muscat, citing “flooding” by those countries’ national carriers, he added. ($1 = 0.276 Kuwaiti Dinars) (By Eman Goma and Ahmed Hagagy; Editing by Will Waterman)