By Andy Sambidge
Aviation firm posts 35% slump in net profit in first six months but still second best H1 figures
Rising fuels costs and forced rerouting of flights due to unrest in the Middle East dented the net profits of Kuwait's Jazeera Airways Group in the first half of 2014.
Net profit fell to KD4.9 million ($17.3 million) for the first six months of the year, down nearly 35 percent compared to the same period in 2013.
The aviation group said operating revenue also dropped to KD29.3 million, down 4.9 percent from H1 2013.
Jazeera Airways Group chairman, Marwan Boodai, said: "The Group's performance in the year's first two quarters continues to be in line with our projections, and though the earnings were lower than last year's exceptional results due to external factors such as a 10 percent rise in fuel cost and flight re-routing due to regional unrest, the earnings were the second highest earnings in the company's history."
Boodai hailed the launch last month of four dedicated gates at Kuwait's international airport, making it the only airline in Kuwait with gates that are exclusive to its customers.
The dedicated gates are "strong product differentiators", he said in a statement.
In the first half of the year, Jazeera Airways upgraded its Istanbul route by operating to and from the city's primary airport, Istanbul Atatürk Airport and also increased flights to Al Maktoum International Airport at Dubai World Central to daily flights.
Jazeera Airways serves 20 destinations in the Middle East from Kuwait including Dubai, Bahrain, Beirut, Alexandria, Amman, Istanbul, Sharm El Sheikh, Assiut, Luxor, Mashhad, Sohag, Jeddah, Riyadh, Cairo and Al Najaf.
Jazeera Airways revenues dropped because FLYDUBAI took it's business when it acquired Sheikh Saad Terminal and although they have a dedicated terminal in the old airport, the old airport is the problem. Also, people with new visas are entering Kuwait through SST because the process has been streamlined. Their failure to upgrade their fleet also effected their business levels because their planes were rundown and although they blame regional conflicts and high petrol levels, this carrier benefits from heavily subsidised petrol in Kuwait. Why haven't other like FLYDUBAI had their profit margins slump in the same conflict areas as Jazeera Airways? Jazeera Airways needs to address their product, but it will be very hard to bring back their customer base who have skipped tarmacs due to a rundown airport in Kuwait full of chaos. Kuwait needs to build a new airport period like all other neighboring GCC countries. Shame on them. It is STEP 1 in their development plan.