Home' Asian Aviation : AAV April 2010 Contents 36 AsianAviation | APRIL 2010
Kuwait-based low-cost carrier (LCC)
Jazeera Airways posted a loss of 8.2
million Kuwaiti dinars (US$28.4
million) for the full year 2009,
compared with a year-earlier pro t
of US$15.6 million, as the global
recession took its toll on demand. Sales for the year
totalled 46.02 million dinars.
"We entered 2009 knowing it would be a challenging
year not just because of the nancial crisis alone, but
also the extra capacity that entered the region," said
Chairman Mar wan Boodai. "With that in mind, we
chose to stay the course and work to seize a leading
market share, which we did by the third quarter when
we became the largest operator in Kuwait."
e airline chief called 2009 "a year of contradictions",
adding that the carrier had continued to optimise its
network to adjust to demand. At the same time as it
revealed its results, the carrier also unveiled a network
optimisation plan, announcing additional ights to
Lahore, Mumbai and Delhi in India, as well as new
ser vices to summer destinations Antalya, Hurghada
Analysts from Gerson Lehrman Group (GLG) say
that Jazeera's loss last year is "no big deal" and that the
carrier can take comfort in the fact that operating from
a single hub at Kuwait International Airport gives the
airline "the exibility to compete without increasing
its cost structure".
" e departure from Dubai International Airport
last year is more than likely the driving factor behind
their loss ..., but by concentrating at home and
expanding outward, its financial outlook for the
coming year will be much more upbeat," GLG says.
In 2009, the airline withdrew its ser vices to Dubai,
saying at the time that the move was unconnected to
the launch of state-owned LCC Flydubai.
In February, Jazeera unveiled its 'vertical integration'
strateg y to bolster growth and pro tability through
acquisitions, infrastructure investments and strategic
partnerships. In line with this plan, Jazeera acquired
Sahaab Aircra Leasing on 15 February. Sahaab is a
pro table entity with a portfolio of nine, single-aisle
"The acquisition increases Jazeera Air ways'
capitalisation and facilitates growth for the airline by
giving it access to regional and global leasing markets,"
the carrier said in a statement. e acquisition was
scheduled to be completed by the end of March,
allowing Jazeera to consolidate the lessor's earnings
with its own starting from 1 January this year.
e move will add an expected 1.2 million dinars in
operational revenue to the airline's rst-quarter results.
e purchase is being funded through a rights issue to
existing shareholders in the third quarter.
On announcing the Sahaab takeover, Jazeera also
revealed that it plans to acquire another Middle
East-based airline this year, in a move to reinforce
its presence in the market. As yet, the airline has not
identi ed any target companies.
Analysts say Jazeera's strategy could be similar to that
of Sharjah-based LCC Air Arabia, which has expanded
into Morocco and Egypt via joint ventures with airlines
and travel companies.
Over the year, Jazeera carried more than 1.8 million
passengers, bringing the total it has carried since it
began operating in late 2005 to 5.2 million. e airline
operates a eet of 11 Airbus A320s and ser ves about
25 destinations in the Middle East, Asia and Turkey.
In line with its plans for expansion, the carrier has
another 29 A320s on order.
Four-year-old Jazeera last year surpassed national
carrier Kuwait Air ways as the biggest operator at
Kuwait International Airport. It now faces a new
challenger, Wataniya Air ways, a full-ser vice carrier that
places emphasis on business class passengers, which
started operations in January 2009.
e launch of Wataniya and the expansion of Jazeera
caused a 30 percent surge in capacity at Kuwait
International Airport last year. It also triggered a fare
war, reducing yields for all three Kuwaiti carriers, while
also stimulating some tra c growth.
However, the additional capacity outstripped
any gains in passenger tra c, with Wataniya Chief
Executive Officer George Cooper complaining
that there were "a lot more seats chasing a few more
Jazeera CEO Stefan Pichler said at the time that
Kuwait, with its population of just 3 million, is too
small to support three airlines. Consolidation would
come, he predicted.
GLG believes that Jazeera is in a far stronger position
now than Kuwait Airways.
"Kuwait Air ways is an absolute mess with nothing
on the horizon to suggest a turnaround," the company
says. "Within a year, it would not be surprising to see
Jazeera Airways break the low-cost mould and start
longer ights with A330s (or even 787s if it can snare
them from ALAFCO or Dubai Aerospace)."●
Kuwait's Jazeera posts loss,
grabs market share
Kuwaiti budget carrier Jazeera Airways took over as the country's
largest airline last year, offering some consolation for the full-
year financial loss it has just announced. Analysts remain
unconcerned, writes Andrzej Jeziorski.
Jazeera now operates a fleet of 11
Airbus A320s, with another 29 on order.
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