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Jazeera Airways posts net loss of $32m in H1

KUWAIT, August 12, 2020

Kuwait-based Jazeera Airways posted a net loss of KD9.9 million ($32.3 million) for the first half of 2020 - a direct effect of the Covid-19 pandemic for the majority of the period.
 
Commercial flights at Kuwait International Airport were suspended for close to five months from March 13 to July 31 while operations resumed on August 1 with limited capacity and a mandated 14-day quarantine for all incoming passengers.
 
“2020 is without a doubt an exceptional year with the impact of the Covid-19 pandemic affecting every sector of the economy, and to the largest extent, the travel and tourism sector worldwide,” said Jazeera Airways Chairman, Marwan Boodai. “We have taken full responsibility to ensure our business continuity as a private company at a very early stage of the pandemic. We implemented immediate decisive measures to safeguard our financial position and liquidity including the suspension of the 2019 dividend payment, activating the drawdown of bank facilities that were not previously tapped and renegotiating cost structures with our suppliers.”
 
Operating revenue for H1 2020 was KD26.7 million ($87.1 million). Number of passengers flown was 540,277 which include passengers of scheduled commercial flights from January 1 to March 12, as well as passengers of expatriation flights during the suspension period. Operationally, the company registered KD4.9 million ($15.9 million) in operating loss and a load factor of 68.3 per cent.
 
The company ended the period with a cash balance of KD27.9 million ($91 million).
 
Looking at the earnings  carefully, in the first quarter of the year operating revenue was KD19 million ($62 milion) and net loss was KD6 million ($19.5 million). Operating loss was registered at KD2 million ($6.5 million).
 
In Q2, operating revenue was KD7.7 million ($25.1 milion) and net loss was KD3.9 million ($12.7 million). Operating loss was registered at KD2.8 million ($9.1 million).
 
During the suspension of commercial flights, the airline redirected its capacity and capabilities to operating full-cargo and charter flights as well as supporting government efforts during the pandemic, mainly with the repatriation of Kuwaiti nationals.
 
“Our team did a phenomenal job at operating the cargo flights. They learnt the cargo business and received the necessary certification from the Kuwait Directorate General of Civil Aviation and Airbus. Within two weeks, we were already transporting necessary produce and goods and successfully transported over 1,600 tons of goods by the end of June,” commented Jazeera Airways Chief Executive Officer, Rohit Ramachandran.
 
He added: “Jazeera Airways also proudly placed its fleet at the disposal of the State of Kuwait to support the tremendous efforts to repatriate citizens. The airline also converted its Park & Fly facility, previously for long-term parking and remote check-in, to setup the first Covid-19 drive-through testing centre in the country in cooperation with the Ministry of Health.”
 
In the past 15 years, Jazeera Airways weathered through a number of macro and micro-economic challenges, from a global financial crisis to geopolitical challenges in a number of the countries we serve in addition to severe oil price fluctuations and regional overcapacity in a highly competitive environment driven by government-backed airlines.
 
Boodai said: “We have always taken prudent and pivotal actions in difficult circumstances. In such times, placing our employees and customers first is our priority by ensuring they are not affected in the long-run. We have confidence that Jazeera Airways will once again come out stronger from this crisis. We are also committed to our role as a Kuwaiti national carrier and will continue to perform our part to ensure we can support the economy and uphold our national duty.”
 
What Was Done During the Pandemic?
 
Redirecting capacity and capabilities to cargo flights:
 
Jazeera Airways started operating full-cargo flights with a capacity of up to 15 tons per aircraft and within a range of six hours flying time from Kuwait following the suspension of commercial flights at Kuwait International Airport. The airline carried over 1,600 tons of cargo in H1 2020.
 
Placing its fleet and facilities at the disposal of the State of Kuwait:
 
Jazeera Airways participated in the largest air bridge repatriation program ever launched by the State of Kuwait. The airline operated over 60 flights bringing home over 6,800 Kuwaiti nationals.  The repatriation flights extended from March 25 to May 10 and flew citizens flew citizens back from London, Warsaw, Moscow, Yerevan, Riyadh, Manama, Dubai, Doha, Amman, Istanbul, Alexandria, Cairo, Najaf, Tehran, Tbilisi and Sarajevo.
 
The airline also built the Kuwait Passenger Reception Centre (KPRC), in coordination with the Directorate General of Civil Aviation (DGCA) and the Ministry of Health at Kuwait International Airport to support the medical screening of all inbound passengers
 
In addition to these efforts, Jazeera Airways converted its Park & Fly facility in record time for the use by the Ministry of Health to perform the first drive-through virus tests in Kuwait. Jazeera Airways’ design and engineering team reconfigured the facility to comply with the stringent requirements of the local health authorities.  A second drive-through testing facility has also been constructed by the Jazeera Airways team at the Jaber Al-Ahmad national stadium.
 
By the end of June, Jazeera Airways announced offering 50,000 free round-trip tickets to frontline heroes fighting the Covid-19 pandemic in the State of Kuwait. The total value of these tickets is estimated at KD5 million ($16.3 million).
 
Operating expatriation flights:
 
The airline also operated expatriation flights that were scheduled under the directive of the Ministry of Foreign Affairs by request from local embassies.
 
2020 and Beyond Outlook
 
Commercial flights at Kuwait International Airport resumed with limited capacity on August 1. Jazeera Airways started operations to high-demand cities that included Dubai, Riyadh, Istanbul, Bodrum and the newly introduced Turkish destination of Trabzon.
 
Boodai said: “Our goal by the end of 2020 is not the bottom line, but our readiness for the following year, the year 2021. Aggressive controls and elimination of fixed costs are underway, including the restructure of aircraft leases, in aim to make significant savings this year, along with ensuring the long term health of our Company. Jazeera Airways maintains a strong balance sheet with minimal debt, which is an exception for an airline. Our financial reserves are also strong enabling it to withstand difficult conditions for at least two more years.” - TradeArabia News Service



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