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Thu 15 Jan 2015 02:19 PM

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Kuwait's Jazeera inks $507m deal to sell planes in major shake-up

Sell-off is part of strategic shift for aviation company to divest from leasing business and focus on airline

Kuwait's Jazeera inks $507m deal to sell planes in major shake-up
Jazeera Airways chairman Marwan Boodai.

Kuwait-based Jazeera Airways Group on Thursday announced the sale of 15 Airbus A320 aircraft for $507 million as part of a major strategic shift for the company.

The group said it is moving to a leased aircraft operation with a focus on the passenger airline business which now contributes 81 percent to its bottom line, up from 50 percent just four years ago.

The buyer purchasing the fleet is a joint venture between Investec Bank and Chow Tai Fook Enterprises Limited, the airline said in a statement.

The transaction will result in additional cash surplus of KWD 24 million and will lift Jazeera Airways Group's cash balance to KWD82 million ($278.4 million) in 2015, it added.

The transaction is subject to regulatory approvals and is likely to be completed during the second quarter of 2015.

Jazeera Airways Group chairman Marwan Boodai said: "The move to divest from the leasing business, though profitable, by selling our fleet and continuing with a leased-aircraft operation was a strategic decision to enhance the airline's business model and focus on future growth opportunities, boost shareholder value and enhance return on equity.

"The decision has unanimous support from our board of directors, the management teams of both our companies ( Jazeera Airways and Sahaab Aircraft Leasing), and our local and international advisors."

Jazeera Airways Group recorded a net profit of KD8.1 million for Q3 2014, an increase of 22.6 percent from the year-earlier period, making it the company's best quarter in history and the company's 17th quarter of consecutive profitability.

Last month, Jazeera Airways Group shareholders approved amendments to its Articles of Incorporation that permit the Group to start new business lines and activities to support its core airline business, become more customer centric, and ensures increase in return on equity in the medium term and long-term.

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