Kuwait's Jazeera Airways board recommends 10% capital increase to 22m dinars

Company says proposal will need the approval of shareholders and should complete within 90 days

Jazeera Airways’ board of directors recommended an increase to the company’s capital in the face of the most challenging six quarters for the global economy and the travel and tourism industry. Courtest Jazeera Airways.Show less

Kuwait's Jazeera Airways said its board of directors recommended a 10 per cent increase in the company's capital amid the "most challenging six quarters" for the global travel and tourism industry.

The budget carrier's board recommended a capital increase to 22 million Kuwaiti dinars ($73m), from 20m dinars currently, subject to regulatory approval and a vote by the company’s shareholders during the extraordinary general meeting, it said in a statement on Wednesday. The process is expected to be completed within the next 90 days.

"The capital increase is a precautionary step to adhere to regulatory capital requirements in anticipation of a potential surge in the accumulated losses account as operations remain derailed by the prolonged closure of Kuwait International Airport," Jazeera Airways said. The airport has been closed since February 7.

The Covid-19 pandemic has hit the global aviation industry particularly hard, forcing cash-strapped airlines to seek government assistance, ground planes and cut jobs to weather the crisis.

In total, the airline will raise about 10 million dinars by issuing 20m ordinary shares at 500 fils per share, according to the statement.

Some 2 million dinars of the increase will be added to the authorised, issued and paid-up capital at the nominal price of 100 fils per share, with the remaining 8m dinars raised as a share premium at a price of 400 fils per share, Jazeera Airways said.

"Airlines witnessed a pandemic that suspended and limited flights around the world for more than a year. Its impact has been unprecedented," Marwan Boodai, Jazeera Airways' chairman, said. "At Jazeera, we have taken precautionary measures to ensure business continuity and to safeguard our shareholders’ value.”

The airline said it has a "healthy" asset base and a "very strong" unrestricted cash balance, which stood at 19.7m dinars by the end of the 2020 financial year.

“As the rollout of vaccinations continue to gain momentum, we are confident that Kuwait International Airport will resume operations soon and Jazeera will be ready to serve its customers," Mr Boodai said.