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Sat 8 May 2010 08:26 AM

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Jazeera Airways deferred A320 deliveries

Kuwaiti budget carrier's COO says deliveries could be changed if economy picks up.

Jazeera Airways deferred A320 deliveries
BUDGET CARRIER: Jazeera Airways lost KD8m ($27.78m) in 2009 but expects to return to profit this year after shrinking its fleet, deferring aircraft orders and raising cash. (Getty Images)

Kuwaiti low-cost carrier Jazeera Airways has deferred some aircraft orders to rein in costs and return to profit, its chief operating officer said.

The company has firm orders for 29 Airbus A320 aircraft, which were to be delivered by 2014. Now it expects to receive the last of these planes by 2016, Reinhard Kossack told Reuters in an interview on Friday.

Two deliveries originally expected for 2011 have been postponed until a later point in time, he said.

"But if the economy picks up, we change that," said Kossack, a German national who was a pilot for 33 years and used to fly for German flag carrier Lufthansa.

Jazeera Airways lost KD8m ($27.78m) in 2009 but expects to return to profit this year after shrinking its fleet, deferring aircraft orders and raising cash.

"I am sure that we will be in the black this year," said Kossack, who joined Jazeera in 2006.

Jazeera, which competes with United Arab Emirates-based carriers Air Arabia and flydubai, is struggling with overcapacities in the Middle East airline industry, just like its peers.

Jazeera said on April 11 it plans to raise its capital by 91 percent through a rights issue after announcing in February the full takeover of Sahab Aircraft Leasing Co, a leasing firm launched in 2008, for 25.6 million Kuwaiti dinars.

Kossack said that money will help the company be less dependent on financing as it pushes to return to profit.

It also shrank its fleet to six from 11 aircrafts and shrank its route network to focus on profitable routes. Of the five aircraft removed from the fleet, four have now been leased to Virgin Atlantic, Kossack said.

Sahab will likely strike a deal to lease out the fifth aircraft within the coming days or weeks, Kossack said, without saying who would be taking the planes.

He also said there were no acquisitions in the work at the moment, adding the company is more likely to focus on forming joint ventures for specific projects.

In January, Chief Executive Stefan Pichler said the company was eyeing acquisitions of companies and airlines in the Middle East and expected to be profitable in 2010, after posting a loss for the first nine months of 2009.

In October, the company had said it was looking at buying a low-cost airline in the Middle East region.

One of Jazeera's projects is adding a terminal to Kuwait airport dedicated to its airline, which will cost about $50 million.

The carrier has now formed a short list of three possible vendors, including German industrial conglomerate Siemens. But the expected completion of the terminal has been pushed back to mid-2012 or end-2012 from end-2011, Kossack said. (Reuters)

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