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in Air Transport / Business & Finance

Jazeera sees profits drop but notes the positives

Posted 1 August 2016 · Add Comment

Kuwaiti low cost carrier Jazeera Airways saw profits drop for the first half of the year by 3% compared to the previous year – but still reported a net profit of $19.7 million(KD 6 million).

Operating revenues also showed a drop of 7.3 per cent with the airline posting $81.3 million for the period January to June.
Commenting on the results, analyst Saj Ahmad said: “Jazeera Airways has continued to make strong in-roads into the GCC low cost market while ebbing away at Kuwait Airways.
“While operating revenues dropped by about 7%, the airline carried 3% more passengers than a year ago on increased load factors - this will have helped yields to offset the competitive pricing in some highly competitive markets such as Dubai, where pricing is more aggressive and would be part of the reason why Jazeera's revenue was lower overall.
“The big challenge for Jazeera Airways is how it manages its long haul ambitions against a backdrop of pressure within the GCC. The region thrives on connecting passengers and Jazeera Airways will have to do a lot of work to entice a long haul airline to partner up with them to make such a venture work.”
The half year figures were worsened by the airline’s second quarter p[erfoamce where profits weredown 38.1% of last year’s second quaqrterer.
The airline also posted results for its second quarter, recording a net profit of KD2 million ($6.5 million), down 38.1 per cent compared to Q2 2015, and operating profit of KD12.8 million ($42.1 million), down 6.9 per cent from Q2 2015.
Jazeera Airways chairman Marwan Boodai said: “We closed the year with a load factor of 72.4 per cent, which is a full 10 per cent higher than our peers’ average load factor on the routes we operate. That’s not to say it wasn’t a challenging quarter, we saw more capacity being dumped on our routes, rising fuel costs, and an expected shift of the summer season as most of Ramadan has now moved into Q2, thus shifting revenue and travel trends and slightly impacting our earnings.”
“Our outlook for the year remains unchanged and in line with our sector’s seasonality. While the excessive overcapacity on the sectors we operate poses a downward pressure on our yields, we expect to counter this pressure in Q3, which only had five days of Ramadan, and close the year with growth in our operational profits and our bottom line.”
 

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