Jazeera Airways plans purchase to expand

Jazeera Airways plans to buy an aviation firm by March as it pursues a strategy of expanding beyond its base in Kuwait, its chief executive says. The low-cost airline aims to open services in markets that are underserved by existing budget airlines - a strategy similar to that of Air Arabia, which now operates hubs in Sharjah and Morocco.

"We are eyeing acquisitions and also working on our hub strategy, and are confident we will announce things in the first three months of the calendar year," Stefan Pichler, the chief executive of Jazeera, said yesterday. He declined to reveal details on an acquisition target. The potential purchase will not be the first expansion effort for Jazeera, which briefly operated a second hub out of Dubai International Airport but pulled out due to poor returns last year.

Jazeera launched in October 2005 and now operates a fleet of 11 Airbus A320-200 single-aisle aeroplanes, with 29 more on order. Its latest delivery was financed this month through a US$105 million (Dh385.6m) export credit finance deal with Natixis, a French investment bank, the airline said. Export credit financing is a popular instrument in aviation because it reduces the risk for the lending bank and allows airlines to receive better terms on their loans. It involves export credit agencies, typically quasi-governmental institutions, which promote exports by helping to arrange financing.

Their assistance can come in the form of credit insurance or guarantees, or direct financial support. Mr Pichler said he was glad to receive the support amid the tight global credit markets. "In these times this is not the easiest task for an airline," he said. The International Air Transport Association forecasts that many airlines would lose billions worldwide due to the slow economy. Jazeera plans to release its full-year audited results in the coming weeks. In December, it revealed it sustained a loss of 1.47 million Kuwaiti dinars (Dh18.8m) between January and September last year, compared with a profit of 1.55m dinars during the same period in 2008.

This year, however, the airline hopes to post better results as it seeks higher fares while still keeping costs low. "We are pretty confident about getting profitable in 2010," Mr Pichler said. @Email:igale@thenational.ae