Preferred option is to buy stake in Kuwait Airways, whose privatisation has been bogged down in delays
Kuwaiti low-cost carrier Jazeera Airways could set up a long-haul service with a foreign partner as an alternative to buying a stake in national carrier Kuwait Airways, whose privatisation has hit long delays.
Jazeera chairman Marwan Boodai said he would still prefer a stake in loss-making Kuwait Airways, but that he was preparing an alternative strategy.
"Plan 'B' is tying up with an international player to go long-haul. We're seriously considering this now," he said in a phone interview.
Kuwait Airways' privatisation was ratified in 2008, and both Jazeera and logistics firm Agility expressed an interest in buying a stake.
However, Kuwait Airways' weak finances and bureaucratic hurdles have delayed the process. The carrier is currently in the midst of a restructuring aimed at returning it to profit, a step required ahead of privatisation.
Jazeera currently only has short-haul regional operations and buying into the national carrier would give it exposure to the more lucrative long-haul market.
Privatisations are being explored with greater urgency in some Gulf countries as a way of boosting state finances hit by a slump in oil prices.
Because of the delay, Jazeera is exploring possible routes for future long-haul operations. Once these are determined, Boodai said it could then identify possible international partners and seek a long-haul joint venture.
Last year, Jazeera paid off all of its debt in order to move ahead with investment plans. It has $105 million in cash on its books, Boodai said.
About 10.7 million passengers travelled through Kuwait International Airport from June 2014 to June 2015, up 8 percent year on year, according to the country's civil aviation authority.
A large portion of the traffic is on long-haul routes, Boodai said.
"Jazeera covers about 5 million passengers in the region. There is another 6 million to tap into if we have strong operations," he said.
In order to focus on its passenger airline business, the carrier last year sold its capital-intensive aircraft leasing unit for $507 million.
Jazeera made a net profit of 14.5 million dinars in the first nine months of 2015, up 11.7 percent year on year.
Boodai expects to deliver a double-digit percentage rise in full-year profit, driven by an expanding Kuwaiti market and lower fuel costs.