Jazeera Airways, Kuwait's no-frills carrier, is caught in severe turbulence. The airline's shares have hit several 52-week lows over the past two months and are off more than 35 per cent since early last month. The shares yesterday closed 3.7 per cent down at 108 Kuwaiti fils. Analysts say investors are worried about the company's debt and whether it will need to raise additional funds.
"The stress of debt on their balance sheet and their underlying operational profitability are worrying," said Abid Riaz, an analyst at EFG-Hermes in Dubai. Jazeera is one of three airlines based in Kuwait. Kuwait Airways and Wataniya are also based there. Jazeera boasts the largest share of the Kuwait market but, unlike other discount airlines, it has not been able to convert passenger numbers into consistent profits.
The airline swung to a loss of 8.2 million dinars last year, from a net profit of 4.45m dinars in 2008. Jazeera flies to 18 destinations in 11 countries. It originally flew out of two airports in Kuwait and Dubai but opted to focus solely on its operations at the Kuwait airport after Dubai set up its own discount carrier, flydubai. "They would have liked to stay in Dubai and their exit from Dubai has also hurt them.
"But now they are looking to strengthen the home base and then expand outwards to improve profitability," Mr Riaz said. He said Jazeera was mostly a retail-driven stock and those investors were losing interest due to the stock's poor performance. The company is awaiting regulatory approval on its request for a rights issues. Its shareholders approved raising the carrier's capital by 91 per cent to 42m dinars through a rights issue to existing shareholders, offering the shares at 150 fils.
skhan@thenational.ae
