Kuwait’s Jazeera Airways is planning to pump more money into its business, as prolonged travel restrictions have “derailed” the airline's operations.
In a meeting held on Wednesday, the airline’s board of directors recommended a 10 percent increase to the current capital, from 20 million dinars ($66 million) to 22 million dinars. It will be covered by issuing 20 million ordinary shares for a total value of 10 million dinars or 500 fils per share.
The capital hike has been proposed “in the face of the most challenging six quarters for the global economy and more specifically, the travel and tourism industry,” the airline said in a statement.
“The capital increase is 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 International Airport,” the airline said.
Marwan Boodai, Jazeera Airways chairman, said the impact of the health outbreak “has been unprecedented”.
“Airlines witnessed a pandemic that suspended and limited flights around the world for more than a year… At Jazeera, we have taken precautionary measures to ensure business continuity and to safeguard our shareholders’ value,” he said.
Airlines around the world have been losing billions of dollars in revenues due to a massive fall in passenger traffic. Despite the reopening of borders in many countries and widespread vaccination, airlines are still struggling.
Barely a few weeks into the COVID-19 outbreak last year, Jazeera laid off more than 300 workers, including ground and cabin crew, as well as support staff.
Authorities in Kuwait imposed travel restrictions on non-citizens in late December 2020 amid the discovery of new COVID-19 strains.
Restrictions are still in place, although the airport was previously scheduled to boost its capacity to 60 percent in February and fully resume operations by August 1.
Jazeera maintained that despite disruptions, it continues to have a “healthy asset base and a very strong unrestricted cash balance”, which was estimated to be around 19.7 million dinars by the end of last year.
“As the rollout of vaccinations continue 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,” said Boodai.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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