Kuwait Airways is on track to return to profitability in fiscal year 2007-8 despite intensifying competition in the Kuwaiti airline market. In June the carrier reported a 9 million Kuwaiti dinar ($32 million) loss for the year ending 31 March 2007, a 61% improvement over the previous year.
Managing director Sheikh Talal Mubarak Abdullah Al-Ahmad Al-Sabah says the airline is "confidently" expecting a profit for the current fiscal year "after many years of losses".
The flag carrier also unveiled plans in June to renew its fleet and expand its 40-city network. Services to Casablanca and Malaga will be launched this summer and several more destinations are planned for next year.
Kuwait Airways will lease 12 Boeing 787s and seven Airbus A320s from 2009. Kuwaiti lessor Aviation Lease and Finance Company will provide the aircraft.
The airline's current fleet consists of eight ageing Airbus A300s and A310s, four A340s, three A320s and two Boeing 777-200ERs. It began evaluating new aircraft late last year to simplify its fleet.
The carrier has been reducing costs as part of its attempt to return to profitability and fend off new competitors. Its expenses were cut by 3% last year to 266 million dinar despite higher fuel prices and traffic.
Al-Sabah says Kuwait Airways' load factor has improved by 13 percentage points over the last year, reaching 74% in March, "despite increased competition from local start-ups and airlines who have been taking advantage of Kuwait's open sky policy".
Jazeera Airways became Kuwait's second carrier in late 2005 and in 2006 posted a $9 million profit on a $75 million revenue stream. Jazeera chief executive Marwan Boodai says the airline has stimulated the market with low fares, which has led to significantly increased traffic for all carriers.
The Kuwaiti market grew last year from 5.3 million to 6.5 million passengers. Jazeera accounted for 600,000 and Kuwait Airways 2.5 million.
Competition could intensify with the launch of a third carrier. Kuwait National Airlines last year received a licence to operate a new full-service airline and raised 50 million dinars ($174 million). It might unveil launch plans after a report by Lufthansa Consulting is completed in July. But Kuwaiti sources say its chief, a former Kuwait Airways chairman, is hesitating because there is not enough room for another carrier in a country of only twomillion people.
Source: Airline Business
