Jazeera Airways reduces capital base

13/10/2015 07:01 AST

Jazeera Airways of Kuwait has received shareholder approval to cut its capital by more than a half, as it adjusts from having closed its airline leasing business.

At an extraordinary general meeting in Kuwait on Oct. 12, shareholders approved a board recommendation to cut the hybrid airline's capital from KD42 million ($139 million) to KD20 million through a share buyback program.

The company will buy back 220 million shares at the nominal share price of 100 fils (one-tenth of a Kuwaiti dinar), resulting in a KD22 million shareholder payout. This follows a KD20 million special dividends payout in June, together with KD10.7 million in 2015 accumulated earnings and other reserves that are required by law to be distributed as part of the capital reduction.

The share buyback brings the company's total payout to shareholders this year to KD52.7 million.

In January 2015, Jazeera announced it was selling off its entire fleet to lessors and would close its own leasing arm.

"Today's shareholder approval to adjust the company's capital is the last step of the company's successful strategic exit from the capital-intensive aircraft leasing business earlier in the year," Jazeera Airways chairman Marwan Boodai said.

"Going forward, our focus will be on the growth opportunities available in our home market within the passenger airline business, which generated over 80% of the company's net profit last year. We believe that passenger airline business in Kuwait will continue to grow strong (sic) and we are well prepared to take advantage of this growth."

The capital reduction process will also include the settlement of all debts held by the company, resulting in a debt-free company by year end.

The small carrier has been turning in steadily climbing profits in recent years and has embarked on plans to build a dedicated jetways and a separate terminal at crowded Kuwait International Airport.

ATW Online