By Andy Sambidge
Kuwaiti airline set to raise capital by offering 200m shares; likely to happen in Q4
Kuwait-based Jazeera Airways Group said on Saturday it had received approval of the company's decision to raise its capital by 91 percent to KD42m ($148.8m) through a rights issue.
A total of 200 million shares will be issued to existing shareholders at a nominal value of 100 fils per share.
The rights issue is likely to take place in the fourth quarter of this year once the customary ministerial process is finalised, the carrier said in a statement.
Jazeera Airways is listed on the Kuwait Stock Exchange and is one of the few fully-private airlines in the Middle East.
However, it needed to receive an Emiree decree to go ahead with the rights issue as it operates in the aviation sector which is deemed to be of national interest.
Jazeera Airways said it has had a record-breaking earnings streak for the past eight quarters, registering record net profits.
Last month, Jazeera Airways announced a first half net profit of KD3.8m, up 21.6 percent compared to the same period last year.
Jazeera Airways Group has a fleet of 15 A320 aircraft, 12 of which already delivered and placed. The remaining aircraft are scheduled for delivery in 2013 and 2014.
In 2011 the airline carried 1.2 million passengers in total across its network that includes destinations such as Dubai, Bahrain, Beirut, Alexandria, Amman, Damascus, Istanbul, Sharm El Sheikh, Assiut, Luxor, Mashhad, Sohag, Jeddah, Riyadh, Cairo and Al Najaf.
I really don't understand all this banter, Jazeera Airways didn't even make the list of top ten Arab carriers by seat numbers? It was beat out by other regional discount carriers, FLYDUBAI and Air Arabia. With Flydubai's aggressive expansion plan in the region which has resulted in a 78 per cent increase in the number of flights, 100 per cent increase in aircraft and 150 per cent increase in routes, I fail to understand how Jazeera Airways can compete with these numbers without the purchase of new aircraft, increased routes and improved presentation. The only reason why Jazeera is seeing improved numbers in the Kuwait market is because of the deterioration of Kuwait's national carrier, Kuwait Airways and the demise of Wataniya Airways which has left a void in the market for consumers on key routes to Egypt, Dubai and Lebanon. And with the failed status of KA, why would you continue to have a maintenance agreement with KA?
What banter are you ranting about?
All the airline will do is increase it's capital to help it grow at a steady pace. Why are you comparing Jazeera (J9) to government-owned airlines that obviously can grow at 10x the rate of natural commercial growth?
And why not maintain their maintenance agreement with Kuwait Airways (KU)? The airline should be deemed capacble enough in identifying their maintenance needs. If KU Maintenance can deliver on that, then what is wrong with that? Nothing, in my opinion.
Let J9 grow slowly and carefully, regardless of who makes the top 10 list of largest carriers. That list doesn't really mean much in this part of the world where government subsidy takes precedence over commercial viability and management efficiency. You should know that. That list pretty much tells us which governments pump the highest amount of $$$ into their airlines!
It is quite beside the point who gets subsidy and who doesn't. Question is, in the prevailing environment does an Airline such as Jazira have a business case to approach public capital? There is nothing in their profile to indicate higher performance levels with future cash infusion. It would be hard to imagine how many would take a stab at their IPO, knowing fully well that the established state backed airlines all over the neighborhood are not likely to provide them the elbow room.
@RAH Well it is obvious in the region that the Kuwait government continuously fails to 'pump money' into their carriers, nor to take any supportive stance on their local carriers. If I recall, it was the Kuwait Parliament that wouldn't even allow leased land to be given to Jazeera Airways for their own terminal and they should have shown a supportive stance towards Wataniya considering that Wataniya did their job for them by lifing the airline market in Kuwait, something Jazeera is unable to do unless they pump capital into this carrier by purchasing planes and developing this carrier on a more aggressive level.