Jazeera Airways to Sell 15 Airbus A320s Aircraft

19.01.2015 Aviation & Space
Jazeera Airways to Sell 15 Airbus A320s Aircraft

Jazeera Airways to Sell 15 Airbus A320s Aircraft

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Kuwait-based Jazeera Airways plans to sell 15 Airbus A320 aircraft owned by its fully-owned Sahaab Aircraft Leasing for $507 million as part of a strategic shift to a leased aircraft operation and a focus on the passenger airline business.

The airline business is the Jazeera Airway Group’s star performer that today contributes 81% to the Group’s bottom line -up from 50% in 2011. The buyer purchasing the fleet is a joint venture between Investec Bank and Chow Tai Fook Enterprises.

The transaction will result in additional cash surplus of KD24 million ($81.5 million) and will lift Jazeera Airways Group’s cash balance to KD82 million ($278.5 million) in 2015, transform it into an asset-light, debt-free company, and enable it to further grow its profitable airline business.

Jazeera Airways Group comprises two fully owned companies, Sahaab Aircraft Leasing and Jazeera Airways, which is a passenger airline based in Kuwait that operates leased aircraft from Sahaab Aircraft Leasing. The leasing company’s customers also include Virgin America, TAP Portugal, FlyNas, and SriLankan Airlines.

Jazeera Airways Group recorded a net profit of KD8.1 million ($27.5 million) for the third quarter of 2014, an increase of 22.6% from Q3 2013’s KD6.6 million ($22.4 million), making it the company’s best quarter in history and the company’s 17th quarter of consecutive profitability, of which 13 had record net earnings.

“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 Chairman Marwan Boodai said:

The passenger airline business contributed to KD10.4 million ($36.2 million) in net profit for the same period, while the leasing business contributed to KD2.6 million ($9.1 million).

The Group is expected to register a non-recurring net loss of KD3.2 million ($11.2 million) for financial year 2014 as a result of the difference between the sale value and the book value of the aircraft portfolio, as of the signing date of sale agreement.

Profit from the passenger airline business is expected to continue to grow in 2015 and going forward.

 



 
 

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