Kuwait’s listed budget carrier Jazeera Airways reported a 24 per cent drop in full year net profit attributed to a one-off 2.4 million Kuwaiti dinar transfer from foreign currency reserves “that were reclassified to statement of income”, the carrier said.
Net profit for 2017 plunged to 8.2m Kuwaiti dinars ($27.3 million) from the previous year, the airline said in an e-mailed statement on Thursday. Load factor was stood at 73.9 per cent, up 6.7 per cent from the year earlier period.
"There's evidently downward pressure on Jazeera's performance given that it's pace of organic growth has stagnated," said Saj Ahmad, chief analyst at StrategicAero Research. "If you contrast that against flydubai and Air Arabia, Jazeera really needs to be doing better - especially given the changes underway at Kuwait Airways."
The Boursa Kuwait-listed company reported a 12.1 per cent decline in operating profit, while operating revenues increased 7.3 percent to KD56.5m in 2017. The carrier's board recommended a 35 fils per share dividend.
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Jazeera "needs to take more steps to regain a competitive edge or run the risk of being a bit-part player whose growth options will remain limited," Ahmad added. The carrier "has to look at staying competitively relevant - they run the risk of falling behind stalwart flydubai who are now operating with fuel efficient 737 MAXs."
Jazeera has launched a series of brand upgrades and new systems to enable better customer experience from booking to flight. As well as investing in new technology and fleet interiors, the carrier expanded its route network with three new destinations last year.
A total of five new destinations will have been launched in the first half of 2018, including Kochi and Ahmedabad, which were both already launched in January, Lahore and Tbilisi. The carrier didn't disclose the fifth new route.
"The year 2017 was a transformational year for customer experience enhancements both on-ground and in the air," said chairman Marwan Boodai. "We unveiled a new brand across all customer touchpoints, invested heavily in our digital platform for better revenue management and an engaging customer experience, and rolled out completely new interiors for our fleet...Our dedicated terminal, currently under construction, will be launched in the first quarter [of 2018] to coincide with our network expansion."
The airline expects to place an order this year to expand and replace its fleet of around 15 jet, chief executive Rohit Ramachandran said in November at an industry conference in Dubai.
Jazeera is considering Airbus single-aisle A320neo against Boeing’s 737 MAX, Bombardier's CSeries, or Embraer's E2 narrowbody jets, he said.