Jazeera plans cost cuts, eyes profit
Hamburg, May 8, 2010
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 was quoted as saying by our sister publication, the Gulf Daily News.
Two deliveries originally expected for next year have been postponed until a later point in time, he said.
'But if the economy picks up, we change that,' said Kossack.
Jazeera Airways lost KD8 million ($27.78 million) last year 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.
Jazeera is struggling with overcapacities in the Middle East airline industry.
Jazeera said it plans to raise capital by 91 per cent through a rights issue after taking over Sahab Aircraft Leasing Company for KD25.6 million.
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 aircraft and shrank its network to focus on profitable routes. Of the five aircraft removed from the fleet, four have now been leased to Virgin Atlantic, he 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.
Chief executive Stefan Pichler said the company was eyeing acquisitions of companies and airlines in the Middle East and expected to be profitable this year, after posting a loss for the first nine months of last year. – TradeArabia News Service