KUWAIT: Jazeera Airways Group announced financial results for the first quarter of 2015 here the other day. The company registered a net profit of KD3.0 million, an increase of 44.6 percent from the same quarter last year. The strong growth was driven by an increase in demand and higher load factors.
Q1 Financial Highlights:
Operating revenue: KD12.9 million, up 3.5 percent from Q1 2014
Operating profit: KD2.4 million, up 141.2 percent from Q1 2014
Net profit: KD3.0 million, up 44.6 percent from Q1 2014
Jazeera Airways Group Chairman, Marwan Boodai, said: “With a 44.6 percent increase in net profit from Q1 2014, this quarter’s earnings clearly reinforce our decision to focus on the airline business. The opportunity for the airline continues to be at home despite the political challenges we see in the region. We operate in an area that has one of the fastest growing populations in the world and enjoys one of the highest disposable incomes in the world.”
Last month, the company’s board recommended record dividends and payments to shareholders totaling up to KD50 million in the form of special dividends for 2014 and a share buyback program. All payments will be executed separately over the next few months with the last payment expected to take place in August 2015, pending regulatory and shareholder approvals.
On January 15, 2015 the company announced the sale of its leasing fleet of 15 Airbus A320s for USD507 million (KD148.5 million). The sale was part of a strategic move to exit the aircraft leasing business and focus on the company’s star performer – the passenger airline Jazeera Airways, which generated 80 percent of the company’s net profit historically. The sale transaction is reflected in 2014 financial accounts and is expected to close by June 30, 2015. Discontinuing operations represents income from the leasing business.
The company’s board-recommended shareholder payments in 2015 are as follows:
Special Cash Dividends for 2014:
KD20 million to be paid following shareholder approval at the upcoming Annual General Meeting of Shareholders scheduled May 21 2015.
Share buyback program payments:
Up to KD30 million, which includes KD22 million for the purchase of 220 million shares out of the total 420 million outstanding issued shares at the nominal price of 100 fils (KD0.1) and up to KD8 million in 2015 earnings and other reserves that are required by law to be distributed prior to executing the planned share buyback program.
Jazeera Airways Group’s share buyback program will be the first voluntary share buyback program exercise in Kuwait based on the new share buyback procedures stated by Kuwait’s new Commercial Companies Law (97/2013) and its executive regulations. The board has committed to executing the dividends and the payouts as soon as shareholder and regulatory approvals are secured.
Background
As of December 31, 2014, Jazeera Airways Group’s cash balance stood at KD66 million as a result of retained earnings generated by the company’s strong performance in recent years.
As a result of the fleet sale transaction, Jazeera Airways Group will receive KWD148.5 million in cash. The proceeds will be used to settle all of the company’s outstanding debt, amounting to KD116.6 million at the end of 2014. Following these steps, the company expects the cash balance to rise to above KD80 million by end of 2015 without taking into account the board-recommended shareholder payments. The company’s paid-up capital is KD42 million. The fleet sale transaction is reflected in 2014’s financial accounts.
