Abu Dhabi, UAEMonday 19 August 2019

Kuwait's Alafco profit drops 36% on provisions

The plane lessor's net income fell to 3.88m dinars from the year earlier period

Kuwait-listed Alafco said third quarter profits dropped on provisions. EPA.
Kuwait-listed Alafco said third quarter profits dropped on provisions. EPA.

Kuwait's Aviation Lease and Finance Company (Alafco) posted a 36 per cent drop in third-quarter profits due to higher provisions and decline in non-recurring income.

Net income for the three months ending June 30 fell to 3.88 million dinars (Dh47m) from the year earlier period, the plane lessor said in a filing to the Kuwaiti bourse on Sunday. Third-quarter total operating revenues rose five per cent to 26.2m dinars. Earnings per shares fell 36 per cent to 4.08 fils in the period.

"The decline in net profit is mainly due to provision recorded against doubtful debts and decline in non-recurring income compared to the previous period," Alafco said in its financial statement.

The plane lessor was established in 1992 by Kuwait Airways Corporation (KAC) and acquired by Kuwait Finance House (KFH) in 1999. The shariah-compliant aircraft lessor deals with aircraft operating leases, sale and leaseback of planes and aircraft lease management.

Listed on the Kuwait Stock Exchange in 2006, the company is currently 46 per cent owned by KFH, 14 per cent held by Gulf Investment Corporation (GIC), 10 per cent by Kuwait Airways Corporation (KAC) and the remainder is held by private investors.

Alafco's fleet consists of 64 aircraft, the lessor said in March, according to the state-run news agency Kuna.

The company has a total order of 40 of Boeing's still-grounded 737 Max jets after it agreed to buy 20 single-aisle 737 MAX 8 aircraft in a $2.2 billion deal during the Dubai Airshow in 2017. Alafco's total assets rose 32 per cent in the period to 1.4 billion dinars.

Alafco said in March the deal is still intact and there were no immediate re-negotiations, according to Kuna.

The comments came after the 737 Max jets were grounded globally in March following two fatal accidents in Ethiopia and off the coast of Indonesia involving Boeing's best-selling plane.

Updated: August 4, 2019 11:59 AM