Kuwait’s Jazeera Airways (J9, Kuwait) is to raise its capital by 10% from KWD20 million Kuwaiti dinars (USD66 million) to KWD22 million (USD72 million) through a share offering to be completed in the next three months, as a precautionary measure to counter the adverse economic effects of the COVID-19 pandemic.

This was the recommendation of the airline’s Board of directors following a meeting on April 14, 2021. The capital increase would be subject to regulatory approval and would be voted on by shareholders during an extraordinary general meeting, the company said in a statement.

A total of 20 million ordinary shares for a total value of KWD10 million (USD33 million) or KWD0.50 (USD1.66) per share would be issued. The total value would comprise a KWD2 million (USD6.6 million) increase to the authorised, issued, and paid-up capital (at the nominal price of KWD0.10 (USD0.33) per share), in addition to a total share premium of KWD8 million (USD26 million) (at the premium price of KWD0.40 (USD1.32) per share).

In a statement, Jazeera said it had a healthy asset base and a strong unrestricted cash balance, which stood at KWD19.7 million (USD65.3 million) by the end of FY 2020.

Jazeera Airways' chairman, Marwan Boodai, said the capital increase was 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."

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

“As the rollout of vaccinations continues to gain momentum, we are confident that Kuwait International Airport will resume operations soon and Jazeera will be ready to serve its customers as safely and reliably as it has done in the past 15 years,” he said.

As previously reported, the company is implementing a five-year strategic plan that will see the low-cost carrier add 13 narrow-bodies to its fleet totalling 30 aircraft by the end of 2025.

According to its 2020 annual financial statement published December 31, 2020, the airline reported a full-year net loss of KWD26.4 million (USD87.3 million), compared to a net profit of KWD14.9 million (USD49.1 million) in 2019. The airline had obtained KWD12 million (USD39.6 million) in bank facilities to support liquidity and, at the time, had cash reserves of KWD20 million (USD66 million). Boodai at the time said he expected Jazeera to make a small full-year profit in 2021, fuelled by a recovery he hoped would begin in August 2021.

The State of Kuwait on February 20, 2021, announced the extension until further notice of a ban on entry of non-Kuwaiti citizens, with the exception of immediate family members accompanied by their domestic workers.

Commercial flights to/from Kuwait were suspended for nearly five months between March 13 and July 31, 2020. Flights had resumed on August 1, 2020, albeit with limited capacity and strict safety measures.