Kuwait's Jazeera Airways is seeking to lease about a dozen Airbus jets to meet its fleet requirements for the next two years, putting earlier aircraft order plans on hold, to capitalise on attractive lease rates.
The discount carrier will issue a request for proposals (RFP) by April for A320 Neo narrowbodies, which will nearly double its fleet to 25 planes by 2022 from 14 currently, Rohit Ramachandran, chief executive of Jazeera Airways, told The National.
"The market has been able to access record low lease prices. In this situation it is more prudent to lease planes rather than buy," Mr Ramachandran said. "We will lease planes in line with capacity growth...we have all the planes we need for this year. In one or two months we'll put out an RFP for planes needed next year and 2022."
The all-Airbus operator earlier said it planned to decide between the longer-range Boeing 737 Max or Airbus A320 Neos for an order of 25 single-aisle jets as it adds more routes. However, talks with the plane makers are now postponed in favour of expanding its fleet through aircraft leases at "fantastic" rates.
"We have friendly conversations with Boeing but to be fair they have challenges at the moment so we will wait until the Max's return to service, then we're happy to engage with them and Airbus regarding potential orders," Mr Ramachandran said.
The 737 Max has been globally grounded after two deadly crashes in Ethiopia and Indonesia within a span of five months killed 346 people. Boeing last week reiterated its estimate that the jet will resume commercial service by mid-2020, after tests revealed another software flaw on the troubled plane.
Mr Ramachandran said he is "largely confident" in Boeing's ability to resolve issues with the 737 Max model.
Jazeera Airways, which last year added a route from Kuwait to London that became the world’s longest with an A320 Neo, is eyeing further expansion in the UK after a "good" three months of operating the London service, he said.
The discount carrier is mulling Manchester next following a "very encouraging" response to the Kuwait-London route, Mr Ramachandran said.
"We've seen tremendous response from other airports, we're looking at Manchester," the executive said. "We're not in a rush, we want to make sure we have a good balance between long and short-haul flights."
It is also considering new markets in the CIS, particularly Russia and Ukraine, with plans to start new destinations into Iran in the second half of the year, Mr Ramachandransaid.
In 2020, the airline has "strong fundamentals" to forge ahead with its expansion plans despite a "challenging" start to the year which have been marked by challenges including geopolitical tensions in Iraq and Iran to the spread of the deadly Chinese coronavirus that triggered global air travel curbs, he said.
The airline, which does not have flights into China, has contingency measures to keep capacity in check in case of a drop in demand if more travel curbs are placed due to the coronavirus outbreak.
"We are mindful of the sentiment, perception and concerns of passengers...our goal is to match capacity with demand and trim capacity where necessary in a prudent way when demand drops," the CEO said, without elaborating on specific routes.
Mr Ramachandran sees a "promising" year ahead, despite the challenges, as the airline's 37 routes are profitable and its own Jazeera Terminal T5 sees growth.
The carrier on February 11 said its full-year profit more than doubled in 2019 as it carried more passengers and its operating revenue rose while it slashed unit costs.
Jazeera Airways posted a narrower fourth-quarter loss of 1.2 million Kuwaiti dinars last year compared to a net loss of 1.8m dinars in the same period a year earlier. Mr Ramachandran attributed the quarterly loss to "significant seasonality" in bookings compared to earlier periods of the year.
