Kuwait Travel Expansion And Fleet Growth Are Expected To Drive Long Term Upside

Catalysts

About Jazeera Airways K.S.C.P

Jazeera Airways K.S.C.P operates as a Kuwait based low cost carrier, connecting Kuwait with regional and medium haul destinations through its own dedicated terminal.

What are the underlying business or industry changes driving this perspective?

• Expansion of inbound and outbound travel flows supported by Visit Kuwait, eased visa rules and Kuwait's Vision 2035 is expected to structurally lift passenger volumes, underpinning sustained revenue growth.
• Network densification, including reopening Syrian routes, adding leisure destinations across Europe, Russia and the Caucasus and increasing India traffic rights, is expected to enhance aircraft utilization and yield, supporting topline momentum and operating leverage.
• Scaling ancillary products via a new website, mobile app and end to end customer journey tools is intended to convert higher per passenger spend into a larger share of total revenue and improve net margins.
• Seat densification, fleet renewal from owned aircraft and in house ground handling are designed to lock in structurally lower unit costs per seat and per turn, protecting earnings through cycles.
• Progressive upgrades and capacity enhancements at the dedicated terminal, combined with Kuwait's three runway infrastructure, are expected to enable Jazeera to grow to 10 million passengers while defending service quality, supporting both revenue growth and margin stability.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Jazeera Airways K.S.C.P's revenue will grow by 12.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 8.7% today to 10.2% in 3 years time.
• Analysts expect earnings to reach KWD 31.2 million (and earnings per share of KWD 0.14) by about December 2028, up from KWD 18.8 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as KWD26.4 million.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 21.0x on those 2028 earnings, up from 20.1x today. This future PE is greater than the current PE for the KW Airlines industry at 20.1x.
• Analysts expect the number of shares outstanding to decline by 0.27% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 21.79%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Management is planning to double the fleet from 24 to 50 aircraft and passengers from 5 million to 10 million. If demand or yields soften due to macro or competitive pressures, this capacity buildout could lead to overcapacity, discounting, and lower revenue and earnings than expected.
• The strategy to internalize ground handling and expand terminal throughput relies on tight execution of a labor-intensive, capital-light model. Operational hiccups, higher-than-expected staffing costs, or safety and reliability issues during the transition could erode the forecast cost savings and compress net margins.
• The bullish network thesis depends heavily on geopolitical normalization and open airspace across Syria, the Levant, Russia, and the wider CIS. Renewed regional conflicts or airspace closures could reverse current flight time savings, raise fuel and operational costs, and pressure earnings.
• Passenger growth expectations are tied to Visit Kuwait, eased visa policies, and Vision 2035 tourism ambitions. If the broader Kuwaiti economy, tourism infrastructure, or policy consistency falls short of these ambitions, inbound and outbound traffic may underperform, weighing on long-term revenue growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of KWD1.67 for Jazeera Airways K.S.C.P based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of KWD1.8, and the most bearish reporting a price target of just KWD1.5.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be KWD306.3 million, earnings will come to KWD31.2 million, and it would be trading on a PE ratio of 21.0x, assuming you use a discount rate of 21.8%.
  
• Given the current share price of KWD1.73, the analyst price target of KWD1.67 is 3.8% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.