Jazeera Airways

Financial Analysis
Jazeera Airways
About the firm
Headquartered in Kuwait, the

Established in April 2004, shares of the company are Key business interests in air
Jazeera Airways is one of the listed on Kuwait Stock transportation and
first privately owned Airlines Exchange (Boursa Kuwait) commercial passenger
in Middle East and has market capitalization services.
of KWD399 million
Owns operational fleet size of Jazeera Airways owns and

Caters to the cost-conscious
17 aircrafts and caters to 58 operates its own terminal at
passengers by offering a suite
destinations across Middle Kuwait International Airport
of low-cost options
East, Asia and Europe – Terminal 5 (T5)
Business Performance
• The firm serviced 2 million customers and Revenue
generated KWD 80 million in revenues in 120,000,000
2021 (growth of almost 94% y-o-y) 100,000,000
• This growth can be attributed to a lower

base which was largely impacted by the 80,000,000
KWD
lock down and lower passenger traffic in 60,000,000
the post-pandemic world.
• The revenue is still below the pre- 40,000,000
pandemic high of 103Mn in 2019 and 82 20,000,000

million in 2018.
• 2021 also marked the return of the airline 0
2018 2019 2020 2021
back to profitability after losses in 2020.

Segment Performance
• Key business segments include Passenger Revenue Composition
Revenue, Ancillary Revenue, Passenger 100.00%
Service Fee, Facility Ancillary Fee, Cargo

Revenue and Lease Income 95.00%
• The passenger revenue accounted for 90.00%
86.2% of the total revenue in line with

2020 share of 85.9%. 85.00%
• The share of passenger revenues has 80.00%

slipped marginally from 91% in 2018 to
86% in 2021 while cargo revenues has 75.00%
increased from less than 1% to 4% in the 2018 2019 2020 2021
same years Passenger Revenue

Facility Ancillary Fee
Ancillary Revenue
Cargo revenue
Passenger service fee
Lease Income
Accounting Standards
The airline publishes its audited financial Interpretations issued by the International
statements in accordance with the International Financial Reporting Interpretations Committee
Financial Reporting Standards (IFRS) issued by (IFRIC)
International Accounting Standard Board (IASB)
Accounting Standards
These consolidated financial statements are The consolidated financial statements have been
prepared using the historical cost basis of presented in Kuwaiti Dinar
measurement
Financial Analysis
Key Profit Ratios Key Income statement Indicators

Financial Analysis
Key Balance Sheet Indicators Key Cash Flow Indicators

Financial
Ratio Income
Cash Turnover
Inventory Statement
Flow
Balance Ratios
Sheet Ratios
Ratios
Indicators Non-Current
Long-Lived
Liabilities
Asset Ratios
Ratios
Income Statement Ratios
Gross Profit Margin
• Improved from negative 34% in 2020 to around 22% (in 2021)

• Helped by the positive revenue momentum that drove higher passenger travel and lower fuel cost (15.7%
of revenues in 2021 vs 21%-24% in previous years)
Operating Profit Margin
• Improved from negative 52% in 2020 to 14.3% in 2021

• Supported by Higher revenues, better gross margins and fixed nature of SG&A
Net Profit Margin
• Despite higher operating profit margins, the net profit margin has declined as the firm is exposed to
higher financing cost in 2021
• The margin turned positive from 63.8% loss ratio in 2020 to 9.2% positive in 2021.
Income Statement – Balance Sheet Ratios
Return on Assets
• Compared to 2020, the return on assets have turned positive again (3.7% in 2021) but
the number continues to be largely below the pre-covid levels (down from 13% in 2019
and 10.6% in 2018).
• The decline in 2021 (compared to 2019) can be attributed to a higher share of financing
cost which now accounts for almost 7% of the total revenues.
• The strong growth in assets is being financed largely by external debt but the financing
cost burden of the firm has caused the profitability to not grow in line with the assets (up
53% annually since 2018).
Return on Equity
• The return on equity for the firm stood at 34% in 2021 (up from -101% in 2020).
Balance Sheet Ratios
Current Ratio
• Ratio jumped from 1.23x (at Pre-Covid levels) from 1.10x in 2020.
• This is driven by higher cash generated due to improved operating activities and higher inventory
Quick Ratio
• The quick ratio worsened at 0.4x (vs 0.63x in 2020 and worst since 2018) due to higher share of inventory in the
current assets.
• The higher level of inventory is driven by spares and aircraft parts.
Leverage Ratio
• The leverage for Jazeera Airways stands at 7.5x in 2021 (better than 13.5 in 2020 but worse than 2018 and 2019).
• Since 2018, the leverage levels has been on a rise from 1.67x in 2018 as the share of debt financing from leased
aircrafts has increased.
Long-Lived Asset Ratios
Asset Turnover Ratio
• In 2021, Jazeera Airways generated KWD 0.41 for every KWD 1 in total asset investment.
• The value is largely down compared to 2019 and 2018 as the revenues have remained
largely flat (down -1% CAGR since 2018) and is relatively subdued compared to growth in
total assets (53% CAGR since 2018)
Long lived asset turnover ratio
• In 2021, the firm has been successful in generation KWD 0.6 for every KWD 1 invested in
the long-term assets of the firm.
• The ratio is up compared to 2020 as the revenue generation of the business increased
but low compared to 2019 and 2018 as the overall productivity has not been in line with
asset growth.
Non-Current Liability Ratios
Debt Ratio
• In 2021, the debt ratio of the firm stands at 54% which means that it has a major share
of assets financed by debt.
• The firm has shifted from 0% external debt in 2018 to 54% in 2021 primarily because of
higher lease liabilities that is financing the firm’s asset growth. This indicates higher risk
on firm’s solvency.
Debt to Equity
• In 2021, it stood at 404% which shows the high levels of external debt on the firm’s
capital.
• The proportion has been much higher compared to pre-covid levels indicating higher
risk.
Inventory Turnover Ratios
Inventory Turnover Ratio
• In 2021, the inventory turnover stands at 79 which has come down from 160 in
2020.
• The lower inventory turnover means that the firm is being slower in terms of
inventory churn which is a bad sign for operational effectiveness of the firm
Days Inventory
• In 2021, Jazeera Airways had 5 days of inventory on the balance sheet as opposed
to 2 day in 2020 and 1 days in 2019.
• The high inventory levels indicate the need to improve the inventory estimation
practice at the firm.
Cash Flow Ratios
Cash Flow margin
• In 2021, cash flow margin stood at 0.56x which is at its highest levels since
2018.
• In 2020, the firm had negative cash flow from operations because of which
the ratio was negative at -0.14x.
Cash Flow Coverage Ratio
• In line with cash flow margin, the cash flow coverage ratio of 0.31 compared
to negative 0.05x in 2020 and 0.41x in 2019.
• This is driven by higher debt levels due to leasing costs.
Conclusion
Overall performance of the

However, the leverage ratio
company has been
has been increasing due to
improved helped by better
higher debt, increasing the
revenue growth, lower
financial risk for the
operating costs and better
company.
asset management
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Jazeera Airways

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Financial Analysis

Headquartered in Kuwait, the

Owns operational fleet size of Jazeera Airways owns and

• The firm serviced 2 million customers and Revenue

generated KWD 80 million in revenues in 120,000,000

2021 (growth of almost 94% y-o-y) 100,000,000

• This growth can be attributed to a lower

pandemic high of 103Mn in 2019 and 82 20,000,000

back to profitability after losses in 2020.

• Key business segments include Passenger Revenue Composition

Revenue, Ancillary Revenue, Passenger 100.00%

Service Fee, Facility Ancillary Fee, Cargo

• The passenger revenue accounted for 90.00%

86.2% of the total revenue in line with

• The share of passenger revenues has 80.00%

same years Passenger Revenue

Key Profit Ratios Key Income statement Indicators

Key Balance Sheet Indicators Key Cash Flow Indicators

Gross Profit Margin

• Improved from negative 34% in 2020 to around 22% (in 2021)

Operating Profit Margin

• Improved from negative 52% in 2020 to 14.3% in 2021

Net Profit Margin

Asset Turnover Ratio

Long lived asset turnover ratio

Inventory Turnover Ratio

Cash Flow margin

Cash Flow Coverage Ratio

Overall performance of the

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