Jazeera Airways K.S.C.P. (JAZEERA) Earnings Call Transcript & Summary

Hello, everyone. This is Mirna Maher from EFG Hermes, and welcome to Jazeera Airways Second Quarter 2026 Results Conference Call. I'm pleased to be joined today by Barathan Pasupathi, CEO; Andrew Littledale, CFO; and Paul Carroll, CCO. We will first start the call with a presentation from management, and then we'll open the floor for the Q&A session. Gentlemen, please go ahead.

Thank you, Mirna, and good afternoon to all the investors, analysts, partners and team members at Jazeera Airways and Jazeera family who have joined us on the call. As you heard from Mirna, I have the pleasure of being joined by Andrew Littledale, our Group CFO at Jazeera Airways; and Paul Carroll, our Group Chief Commercial Officer, as we'll unpack what has been a very challenging 2Q '26 as well as the first half '26 earnings webcast. Now before I get into the agenda proper, I would like to just give you a preamble of where we are today following our Q1 call in which we highlighted the various challenges that we were facing and how we were conducting the business for almost 30 days of -- 28 days of quarter 1 from 28th of February to the 31st of March or the full month of March in the Kingdom of Saudi Arabia under Mission Barakah. Now following the challenges we've had in Q1, those challenges continued in Q2. We have had now one of the toughest challenging periods in the 20-year history at Jazeera Airways. Kuwait International Airport continued to be closed in the quarter for a period of 57 days until the 26th of April, and it's only in the first week of May -- on the 3rd of May, we resumed full operations in Kuwait. Capacity in the entire quarter and for 4 months of the first half of '26 was cut severely. You'll see in today's presentations by both Paul and Andrew capacity was down between 45% to 50%. So with capacity only being restored gradually from the month of May and into June, we conducted our business in Q2 under very dire circumstances, but we maintained and we demonstrated a safe, reliable and customer-centric operation serving Kuwait and the communities in Kuwait. Yes, the first half results were down by 10.3%, but we continue our investments into the future at Jazeera Airways. So before I unpack the results, I just want to lay out that we are not out of the woods when it comes to Q2 and in fact, Q3 and Q4, and we hope to give you more color on how we're going to conduct the business for the second half of 2026. So let me now take you into the operational headlines of the business. It is no surprise that our passenger numbers were short by 40.6% or almost 41%. When you look at what has happened in terms of capacity, capacity was withdrawn by almost 45% to 50%. This is also not Jazeera Airways. This applied to the whole entire aviation market in Kuwait. Both Jazeera Airways, Kuwait Airways and our other international partners, which form almost 45 different airlines limited flying into Kuwait. Today, a number of airlines have not actually resumed any operations into Kuwait, and yet Jazeera continues to serve the market as best as we can. Load factors in the quarter went up by 4.5%. That is a function of supply and demand. A lot of seats were taken out of the market, yet we had customers who needed to travel -- traveling on Jazeera Airways to the more than 27 to 29 destinations that we connected Kuwait to. Utilization in the quarter was down by 30%. Now there's a clear reason why utilization was down because even today, we are operating on a limited operational window of between 4:00 a.m. to 10:00 p.m. and follows very stringent curfew periods from 10:00 p.m. to 4:00 a.m. So under these circumstances, we are not able to commence a lot of red-eye flying into the markets East, which were predominantly a part of a huge Indian subcontinent network, which Paul will cover. The good news story in this quarter is yield. Our yields were impressive at 145% growth. Now one would think this is only because of the war. But what happened in Jazeera in the quarter is, as we've announced in Q4 of '25 and Q1 of '26, we were embarking on a transformation program on the web and app, and that went live in the month of May and with a different product class. So you'll see a huge growth in ancillary revenue, which will be covered by Paul. Overall, in the quarter, RASK grew by a respectable 99.3%, while addressing the CASK growth at both CASK ex-fuel and CASK -- full CASK at 74%. However, having said RASK growth at 99.3%, this was a period, if you all recall, post-COVID, you had a period of surge in travel bookings and a huge travel spike. However, post this period, we have seen subdued demand across the network. Rationally, customers are concerned about the continued Middle East conflict in the region. Customers are concerned with the stop/start operations at Kuwait International Airport and customers are concerned on traveling out of Kuwait, not knowing whether they can return back to Kuwait. So you'll find that in the color we provide you in today's call, we see a very subdued Q3, and we see a very subdued Q4 unless and until this conflict is fully over. Now projecting second quarter results for the first quarter of '26. The performance in the second quarter with a surge in travel demand spike and the yield we've seen has helped us taper our losses in Q1 of '26 to record a respectable performance, but yet a profit decline of 10%, which will be covered off by Andrew. Passenger numbers were also down by 1/3 at 32.3%. We realize that in the 6 months to the first half, only 2 months were fully operational. From the month of March -- from April -- sorry, on from February up to June, capacity was taken down by almost 90% and only fully restored to almost 50% to 60% of prewar capacity. And hence, passenger numbers were down throughout the network. Load factors, however, bounced at 3.6% growth. That, again, is a function of the limited number of seats we put into the market in the entire network and the surge in spikes in bookings we saw post returning to Kuwait on the 3rd of May 2026. Utilization, however, is still down by almost a quarter of 26%. Now in this period, between Q2 to Q3, at Jazeera Airways, we normally record utilization between 12 to 15 hours. Now coming into Q3 following Q2, the numbers are still in the range of between 8.6 to under 9 hours. So we continue to see the continued subdued demand we see in the market and the so-called operational limitations and window utilization will continue to be down for even Q3 of this year. Yield, on the other hand, grew at 67.6%, and Paul will give you some color in terms of how this almost KWD 30 spike in yield is a function of a surge -- initial surge we saw in demand. Just like you've see in post-COVID, the initial travel spike and revenge travel demand, we saw a huge spike of people wanting to return home during the summer holidays and inbound leisure, inbound labor traffic and family traffic coming in. RASK in first half grew at 55.5%. However, that did not offset CASK at 56.5%, excluding fuel. But nevertheless, you'll see that performance came down by more than KWD 1 million in the first half of '26 to record a 10.3% drop in earnings in the first half of 2026. We are now projecting a subdued demand going into Q3 but trying to hold a so-called balanced approach to Q4 of 2026. We will cover in this presentation how we plan to offset any shifts we'll see in travel demand by also our Saudi operations that will be planned to start by Q1 of 2027. Now I'll pass the call on to Andrew to take you through the financial headlines.

Good afternoon, everyone. Thank you very much, Bara. I think you scene the very well for the quarter and the year-to-date. So I'd just like to highlight some of the financial numbers from the income statement. So when we look at the quarter numbers, our revenue has increased by 45% in the quarter to KWD 70.7 million from KWD 48.6 million in the year before. And I think that is clearly primarily driven by high demand and high yield despite the fact that the number of sectors operated was 45% lower than the same quarter in the previous year. At operating profit level, the quarter is KWD 11.7 million compared to KWD 4.8 million in the previous year, an increase of 141.8%. Now that is despite significant increases in operating costs in the quarter, driven by primarily by fuel costs, which were double what they were in the second quarter of 2025 and the additional cost of operating out of Saudi Arabia. But as a result of that, primarily as a result of the high yield in the quarter, our net profit increased by 99% to KWD 9.6 million compared to KWD 4.8 million in the previous year. When we then look at the year-to-date, I think the year-to-date is clearly heavily influenced by performance in the second quarter. So our revenue is 13% ahead of the prior year. Again, we are probably around 36% fewer sectors operated in the year-to-date compared to the year before. Again, that also flows into the operating profit, which itself is higher by 19% at KWD 13.8 million. Again, there were very high operating costs in the year-to-date related primarily to the fuel price, which was $140 in the year-to-date compared to around $99 in the previous year. But overall, that net profit level in the year-to-date, we're down by 10.3% compared to the prior year. One of the main reasons -- well, one of the significant reasons behind that, of course, was a very high additional overheads from operating the airline out of Saudi Arabia in the quarter related to Mission Barakah. And I think probably as it disclosed in the -- well, as disclosed in the financial statements, we did have a credit loss in the first quarter of 2026 of KWD 2 million. So as a result, we are effectively about -- we're KWD 1 million behind where we were in the year-to-date for 2025.

Okay. Thank you, Bara. Thank you, Andrew. So good afternoon, everybody. I will just talk here to the ancillary performance in the second quarter and first half of 2026. So in terms of where we ended Q2, our ancillary revenue grew a very strong 78% on a year-on-year basis. And on a per pax basis, we witnessed a 200% surge in our ancillary spend per passenger. Just to give some context in terms of the second quarter performance, I think, look, despite the challenging operational conditions in the Kuwait market, we have remained very steadfast in our digital transformation journey. So on the 1st of May, we deployed a new web and app into market. And I think the -- we've seen some really, really impressive improvements in our bundling proposition. So we introduced 4 new fare categories into the market, the basic product being just hand carry-on only. Everything else is a value add in terms of our 3 other bundles: the Comfort, Flex and Fully Flex. We witnessed a very strong response to that proposition. I think 65% of our passengers in the second quarter are buying the Comfort bundle and above. So that has allowed us to really improve our attachment rate across those categories and subsequently drove a higher ancillary per spend in second quarter. In terms of half 1 performance, ancillary revenue grew 20% on a year-on-year basis. On a per pax basis year-on-year grew 77%. So I think, look, we expect this to be a steady state going forward. We continue to focus on our ancillary revenue generation, and we have an ambition. Currently, our ancillary per spend in the month of June was about 22%, where we would expect going forward to remain about 25% to 30%. Moving on to in terms of market share position in the Kuwait market. Despite the challenging conditions, as the 2 gentlemen have mentioned, we managed to grow our market share position in Kuwait for the second -- sorry, for the first half of the year. We grew our market share position by 6 percentage points. That's really driven by a slower capacity return from competition who really only restarted operations -- foreign competition only really restarted operations from first week of June. In terms of the demographics of the network, that shifted slightly. As you can see, we focused more of the flying closer to home given the airspace restrictions in Iran and Iraq which has pretty much inhibited our ability to fly into the CIS and Russia. So we've concentrated our network distribution in the GCC, India, Egypt, and that is what we see going forward into quarter 3 as well. We still have those airspace restrictions in those aforementioned countries. So that we'll continue to focus our network mix in Q3 there. Next slide, please. So look, despite the restrictions, we've managed to restore the majority of the network year-on-year. So in the first half of 2026, we flew to 73 destinations as opposed to 66 in the first half of 2025. In addition to that, we launched Milan Bergamo on the 22nd of May, and we also brought back after an 11.5-year absence, Aleppo. Syria has been a really, really strong market for Jazeera. We started domestic operations in July of 2025, and we've managed to grow frequency -- weekly frequency in Syria to 28 weekly flights. And we just announced -- sorry, we just flew back to Deir ez-Zor last Saturday. So we're very focused on continuing to build connectivity and frequency into the Levant and into Egypt because they're really our core markets. Next slide, please.

Thank you, Paul. I just want to highlight a number of points that Paul has mentioned and also highlight another constraining factor to all the investors and analysts on the call. Kuwait International Airport is not only constrained by the operating windows of between 4:00 a.m. to 10 p.m. We still are not allowed to carry transfer traffic -- transfer traffic across the network. Pre-COVID -- pre-conflict, I think you will be aware that seasonally, in the peak summer periods, we carry between anywhere between 10% to 15% of transfer traffic. And then in the so-called shoulders, we carry anywhere between 25% to 30%. We don't have the luxury to carry transfer traffic in Kuwait at the moment, given the so-called safety considerations that the regulators have imposed on airlines operating in and out of Kuwait. However, having said that, if you look at our load factors, even though our load factor grew by 4.5% to 76%, we need to get the load factors in the business to 85%. What we are doing at the moment is creating huge trunk density. If you look at where Jazeera stood in Damascus almost 12 months ago, we only had 3 services a week into Damascus. We then followed them to a daily service. And today, as I speak to you, we have tripled daily services to Damascus. We then followed that with Aleppo with 3 services a week, and now Deir ez-Zor. So if you look at what Jazeera has done and for those analysts who have been following Jazeera for the last 20 years, the opportunity we have in the Levant and the history of our footprint in the Levant is going to play a huge significance as we move forward and create huge density. Now when -- the market is open even before 24-hour operations. And when transfer traffic is allowed in Kuwait, we are confident that we will, in Q3 and Q4, address the weakness we have seen in Q1 and Q2 that has resulted in a 10% decline in results to recover traffic on load factors and revenue performance as well. So with that, we remain confident on a network point of view on launching more destinations. You'll hear very shortly in the next couple of 3 weeks how we are following on with the initial launch of Addis Ababa that was just done last week to more points across the network, even stretching to West Africa. That will be covered off in Q3 and this call in Q4 as well. Now in terms of operational outlook, the network, given the current constraints we have and the fact that we have to highlight leisure demand is missing outbound of the GCC and to some extent, this is not only a Kuwait factor. If you see where the so-called the traffic flows have migrated out from the GCC to Europe, Asia and other hubs, that is only a factor of the current government travel alerts, the whole region is seen. Australia, the U.K., the U.S., name it, a lot of governments have put travel alerts in this part of the world. So hence, with the huge travel concerns and travel alerts and embassies advising their national to basically stay out of this region for the time being, we are only seeing strong VFR and labor demand. We are not seeing the typical/atypical summer leisure demand outbound Kuwait and also inbound directional VFR traffic coming in. So we've seen a lot of directional outbound flows in Kuwait, and we hope the relative stability we've seen in the last 7 to 10 days continues going forward because we're going to go into some pockets of peak travel demand, including the long weekend we have in August in Kuwait as well. However, the network is only being served by strong VFR and labor demand. On costs, the ongoing cost reduction continues across the business. You heard from Andrew talking about how Mission Barakah saw a huge spike in costs because at that stage, we flipped the business from a hub closure in Kuwait to 5 other different hubs: in Cairo, in Jeddah, in Madinah, in Qaisumah and in Dammam. That huge shift that happened through grid agility and nimbleness by the teams also saw a huge spike in costs. We had to move equipment. We have to move engines. We have to move aircraft. We took over 40,000 room nights in Dammam, serving the whole nation of Kuwait and the communities of Kuwait through the Kingdom of Saudi Arabia. So while we saw a huge cost spike in the tail of Q1 and the full of Q2, we are addressing those cost challenges in Q3 and Q4. However, the results of having low utilization and low ASK production will continue challenging CASK, both as CASK excluding fuel -- and CASK excluding fuel and total CASK as well as we have produced less and generate less ASKs given the constrained utilization hours in the network for the time being. Geopolitical unrest is an ongoing risk to the business. While we seem to have addressed to some extent, the Iraq and Iranian issues in Kuwait, the network into the Kingdom of Saudi Arabia and the ongoing current new developments in Yemen have got some cause for concerns, but I would like to say we are very appreciative in the way the Kingdom of Saudi Arabia and GACA have conducted the so-called airport operations. None of our Saudi destinations have seen any significant impacts. Yes, we have incurred some delays going in and out of some of the airports, but we don't see an impending impact on Saudi Arabia from the operations we've done. In fact, we are quite bullish on Saudi Arabia on many counts. And if you look at the network as a whole, given the comments by Paul, the Indian traffic into Kuwait, the Pakistan traffic into Kuwait, the Bangladesh, the Kathmandu traffic into Kuwait remains strong on the accounts of strong VFR and strong labor demand. However, we are still very concerned in terms of the pockets of stop-start operations that has been ongoing, not only in Kuwait, but in the other FIRs and GCC, and we remain vigilant. At any point in time, if we need to mitigate the risk as we demonstrated with Qaisumah and Dammam, we will be able to switch our operations to airports outside Kuwait. In terms of market share, we are pleased that we've been able to get a respectable 35.9% market share, almost 36% market share to register one of the highest growth we have seen of 6% year-on-year in the first half of '26. However, we like investors and analysts to take into account that we operate the A320 aircraft, and we do not have wide-body aircraft in the network. While competitors are able to up-gauge their flight into wider-body aircraft, we will depend very heavily on driving greater utilization. The good news story for everyone on the call is that we have completed 100% retrofitting our aircraft to the 180 Y seats. If you recall, last year on the turnaround plans, one of the initiatives was to drive more seats on our fleet, and we have been busy in wartime. During the war period, when we're impacted on flying, we set a lot of aircraft outside of Kuwait into workshops to get all our aircraft right now retrofitted to 180 seats. So that is going to hold well for us when we come out of this conflict period into Q3 and Q4. And if there's stability in this period, we will be able to put more seats in the market as we embark on the growth aircraft of another 26 units that will see a spike in growth of almost 35% between Q4 of 2026 to Q4 of 2027 as we take on 8 new units into the business. Of course, you've seen Andrew Littledale joining us on the first day of the World Cup as a new lineup into the leadership team, and we're very pleased that Andrew in his first tenure as CFO in the first month is already attending an earnings call as well as getting through the results for Q2. Andrew?

Thank you, Bara. Yes, actually, just to continue with some of the key parameters for the quarter and the year-to-date, I'll go to the quarter first. In terms of average aircraft, we're down by 1 as one aircraft was returned to a lessor during the quarter. Destinations in 2026 were actually lower than the year before as a result of the geopolitical situation and the inability to fly to some of those destinations. Again, within all of the revenue drivers, we can see that seats, passengers -- well, they're all significantly lower than the year before, again, more as a result of the geopolitical situations we have discussed already. But obviously, the main revenue driver in the quarter has been the significant increase in yields, which has driven the revenue in the quarter. Of the profitability drivers, it's really all the same scenario. They're all significantly lower because of the political situation. And those numbers really are reflected again in the year-to-date where the seats in the year-to-date are down by 35%, passengers are down by 32%. But despite that, the net yield in the year-to-date still remains 67.6% higher than the first half of the previous year. And the sector numbers block out and utilization in the year-to-date, again, are all as a consequence of the geopolitical situation in the -- well, probably since the end of February. So when we look at the financial performance, for the quarter, we're saying revenue is obviously higher as again, driven by constrained capacity environment and rational market pricing, which effectively has resulted in these very high yields. Operating expenses were higher by 35%, primarily driven by higher fuel prices. As we've seen in this quarter, it was twice the price of the previous quarter -- same quarter last year and overheads effectively associated with Mission Barakah during the closure of Kuwait Airport. And as a result of that, really, operating profit was higher by 141.8% and the net profit was 99% higher than the previous year. When we look at the balance sheet, we've actually drawn down on some of our loans. So the cash has gone up as a consequence of drawing down on those loans. Now -- but some of that drawdown was used to acquire 2 A320s during the quarter from lessors. So that can be seen in the 25% increase in fixed assets. And when we look at the -- primarily the increase in liabilities as a result of the drawdown of the loans used to acquire those aircraft, I think probably these graphs illustrate very well what's happened in the quarter in terms of passenger numbers, which is a very steep decline, yields, which is a very steep increase. And the other one, of course, is the Brent against Singjet swap is effectively tracking the cost of fuel, which obviously you can see there has really virtually doubled quarter-on-quarter from 88 to 160 just in a period of 1 quarter. And as a result of that, because we have lower capacity and because of demand, we have 33.3 fils of revenue per ASK and 25.6 of CASK. So obviously, those increases are reflective of increases in demand and increases primarily in fuel costs and the other costs associated with Mission Barakah. So really, they are reflective of the quarter. Quite clearly, we won't follow that same trajectory for the remainder of the year, but it does remain even now a very challenging environment. I think at the moment, fuel for this month is still around USD 130 per barrel based on MOPAC. So the cost environment remains challenging. I think where the yield environment is not quite so buoyant as it was in the second half due to increased supply of capacity. So I think that's where we are. And I think, as I say, these graphs are quite reflective of the quarter that's just passed.

Thank you, Andrew. Before we conclude the call, I'd just like to give some commentary in terms of where we are going in terms of outlook. And basically, firstly, to thank the Kingdom of Saudi Arabia as big as the skies in terms of what support we've received from the entire stakeholder and communities in Saudi Arabia to allow us to demonstrate a safe, reliable and customer-focused operation in almost 4 different airports in Saudi Arabia, and we are very pleased to be able to do that right now with the Jazeera Airways Charter AOC award that we received from GACA in December of 2025 to ensure that by the first quarter of 2027, we commence our operations in Saudi Arabia. To give you some color, in my recent visit to Saudi Arabia, the airports are packed. And this is one of the new segues for Jazeera's growth into the future. As we embark on taking on almost 35% new capacity up to the end of 2027, we see a huge role in the Kingdom of Saudi Arabia for Jazeera Airways. As all of you know, in Saudi Arabia's Vision 2030 plans, there's huge aspirations to grow traffic to almost 330 million. In fact, traffic last year was ahead of the 100 million target. Jazeera Airways has been a credible operator in the Kingdom of Saudi Arabia through our operations in Kuwait. And today, we are able to now have another stream of operations in the Kingdom of Saudi Arabia to help foster more growth across all the airports we can operate in Saudi Arabia as we have demonstrated: in Jeddah, in Madinah, in Qaisumah and in Dammam. So we're very pleased to say that we are hugely thankful to the opportunity in Saudi Arabia, but more so in exploring greater growth in both Kuwait and Saudi Arabia, Kuwait being our primary home and Saudi Arabia will be our second home. With that, I'd like to acknowledge that as we embark on addressing the challenges in Q3 and Q4, which we are confident that we'll do with a very resilient, agile and nimble team at Jazeera Airways, we want to thank all stakeholders across Kuwait, the Saudi Arabia and especially team members in Jazeera Airways and again, demonstrating on what Jazeera stands for in terms of huge resilience as we've done in the last 20 years in any challenges and adversities. As you heard Andrew speak earlier, we purchased 2 Airbus A3neo aircrafts in this current period of turmoil. We've also purchased 6 Airbus A320 Classic aircrafts. We are positioning ourselves as we address challenges in Q2 -- that we've addressed challenges in Q2 to focus on addressing challenges in Q3 and Q4, but setting the stage as we've done in transformation across the app, the web, the fleet and also the entire business as we look to further foster a period of growth when the growth aircraft -- on the 26 aircraft order books starts being delivered in Jazeera in October of this year. With that, I conclude the comments on this call, and I'll pass it on to Mirna. Thank you.

[Operator Instructions] We'll take the first question in the chat from Aly Adel. He's saying congratulations on the impressive results. Given the uncertainty this year, it would be hard to ask about expectations or guidance. Yet my question is whether you have seen new customer trends in destinations and then how long or how frequently they book flights compared to pre-disruptions? Also, which regions might be promising to expand into? Is Europe a top priority? And regarding the Asian market, would you consider more flights to the Far East?

Thank you. And, Mirna, who asked the question, please?

It's from Aly Adel.

Aly, thank you for the questions, Aly. I think you've asked probably we need to unpack around 3 to 4 questions within 1 question. I will address the first part, and then I'll hand it over to Paul in terms of how we are seeing things in the so-called commercial sphere as well as taking on new markets. In terms of seeing new customer trends, look, our customers -- we know our customers, and we know the personas of our customers in the various market sense, be it the VFR market, the Indian market, the religious market and of course, the corporate market will travel or less. However, I don't think it's fair to say any of the customers' habits have changed or we probably don't have a crystal ball to say that because all our habits have changed during this war. I think we choose to travel in pockets of where we feel safe, and we choose to bring families out of Kuwait when we feel safe or bring them back into Kuwait when we feel safe. But we are seeing some good reception from our customer base in Kuwait. The one thing I'll add to that is in this current period, we have demonstrated to the entire community in Kuwait, and we have get a lot of anecdotal feedback from both the communities and even written letters to us of how we're thanking Jazeera Airways on keeping Kuwait connected to the world, especially during the 57 days where the airport is closed. As you recall, for a significant number of period during the 57 days, it was only Jazeera Airways. I repeat, only Jazeera Airways out of 45 different carriers that kept Kuwait connected to the world until others came along. Now with that, we are actually seeing a lot of travelers who have actually not flown Jazeera Airways flying with us to our terminals and then coming back to say, "Wow, why have we never flown at Jazeera Airways before." So there was a lot of myth in the market. And I think this current crisis has helped us unlock it in many ways, where we are seeing some new trends in terms of new customers coming to us. With that, we are configuring certain expectations in the terminal by putting certain services like fast track, priority access, lounge access, and we see a huge new premium yield customers coming to us. So we are pleasantly surprised with the new catchment and the new market that is growing towards us. And the kind of comments we're getting and NPS scores on feedback we're getting is that these customers will continue flying with us across the network. Now on your questions on new destinations in the Far East as well as the so-called the booking curve, I'll let Paul address that. Paul?

Thank you, Bara, and thank you for the question. Much appreciated. I think, look, I'll touch on the Europe performance. I think, look, we do see softer demand into Europe on a year-on-year basis into the third quarter, and we've had to pivot down capacity to reflect that weaker demand. But that doesn't mean we're stopping in terms of where we want to be in Europe. I think in the second quarter, we inaugurated Milan Bergamo. We got a fantastic incentive package from the Bergamo Airport. And we will continue to look at airport partnerships with stakeholders in Europe for the summer of 2027. In terms of -- we have 2 new aircraft coming in the fourth quarter and an additional 6 aircraft into 2027. We have a tranche of destinations we're evaluating at the moment. I think Bara mentioned earlier, September, we will start operations to Addis Ababa, and that will be our first entry into Sub-Saharan Africa. We are looking at further opportunities in Africa, in Europe and as well as we will be ready -- should Iran open, we will be ready to start -- restart operations. So we believe there's plenty of flying for these 8 additional aircraft coming in the next 15 months, but we will continue to work with partner airports and also, we do hope that traffic rights become a little bit more liberalized in India, Pakistan over the next 12 months. I think management continue to engage stakeholders to get additional seats. So overall, the VFR labor segment has been extremely resilient. And we think if things remain settled, European demand will improve once the Kuwait leisure segment starts flying again. So thank you again for the question.

I think you've covered part of the second question. From your experience, is it now a good time to receive new planes and build capacity early before foreign airlines return to operating normally in the region, even though this might partially impact Jazeera's margins given the current limited demand?

Look, thank you for the question. And I think it is a very appropriate question given the current situation of the conflict in this part of the world. But if you look at Kuwait and you look at what we have done and what we're doing, of course, the point of Addis Ababa and West Africa, Sub-Saharan, West Africa, Kuwait is the least connected country in the whole of the GCC. I repeat that because if you look at the airports in Australia, in Thailand, the hub airports in Singapore or London or even the GCC, you have airports with connections of between 200 to 300 markets. And yet today, it is with Jazeera's efforts that Kuwait is connected to almost up to 80 to maybe 80-plus points. Now as a country, as a nation with 5.1 million residents, both Kuwaitis and foreign nationals living here, we consider Kuwait to be a part of the GCC, and we consider that within Kuwait, in terms of actual aircraft capacity, that's not enough. In fact, from a long-term trajectory point of view, the next 5 to 10 years, we believe that airport traffic, which was actually didn't actually catch up to pre-COVID levels of north of 15 million should grow into 35 million to 50 million. We believe Kuwait, which has got 3 beautiful runways with the third runway being more than 4 kilometers long with 2 control towers and the entire nation of 5.1 million so-called residents and citizens of various denominations, this -- the country is ripe for aviation growth. And at Jazeera Airways, we are here to play a huge part in the growth. We believe that when the settings is right, the dials are right, there will be a time and place for Jazeera holidays. There will be a time and place for Kuwait tourism as well or visit Kuwait to take off. So we plan to see huge growth, and we believe that in the long-term, growth in Kuwait will recover more aircraft. And the aircraft we are bringing in Kuwait are the A320 narrowbodies, which have been workhorses for Jazeera Airways in the last 20 years going into so-called markets that we're going to launch. Now if you put that into perspective, with Jazeera Saudi coming into the fold as well, you'll soon realize that is a market which is almost 10 multiples bigger than Kuwait. So I'll leave it to now tell us whether we are actually ordering enough aircraft or we should order more aircraft because from an airline point of view, in terms of how we see capacity growing in Saudi Arabia and capacity growing in Kuwait, we believe we do not have enough aircraft ordered to date at Jazeera Airways.

We'll take the next question from the line of [indiscernible].

Congratulations on the results. I have 2 questions. First is that in terms of the second quarter, could you summarize the key reasons that you were able to report strong results versus your competitors in the region. One of them obviously reported second quarter results, but these are impressive numbers. That's one. The second thing is that also can you remind us the difference in terms of business model, Jazeera Airways versus the other 2 listed airline operators?

Both great questions. Thank you for those questions, firstly. Look, I think the team have actually highlighted that quite well. If you turn the clock back to COVID and look at the quarter where the COVID window for travel opened and you will realize the performance in Q2 has not been any different from the performance in those quarters immediately preceding the so-called travel opening post-COVID. So what -- but the situation is amplified today by the finite capacity in the market. So post-COVID, you had all carriers coming in and out of Kuwait and yields were so high, and I think yields were staggering to some extent. They're not anywhere near what we are actually priced into the Q2 of this period. However, post-COVID, the so-called fuel cost is a bit different from where it is today. So what we have actually in a disciplined approach, we have put capacity into the market, we have priced capacity into the market in a way that demand is met. And our flights in the so-called second period -- second quarter, you realized the load factors actually went up by 4%. In some periods, they were actually running at around 95% to 100% because people really needed to travel. On the other thing, no one actually asked us this question. I'll clarify this for all the analysts. We have not hedged fuel. We have not hedged fuel. So what do we do? We have to charge a fuel surcharge. So we have a very disciplined cost recovery on fuel, which, as you heard from Andrew, almost doubled from 88 to where it was from Q3 -- from 1Q to 2Q to 160 a barrel, but we have priced that into the market in a very disciplined approach because we don't get any subsidies. We are a private airline. We are listed in the stock market. And everything is what we call it open and transparent. And so when we pay fuel at 160, we have to price them, okay? On top of that, we have actually optimized our workforce to some degree. We actually didn't, what do you call it, fully utilize the workforce. There was a huge number of team members in Jazeera Airways that went on leave. Again, we are calling all of them back, and most of them have actually returned since the 3rd of May when we resumed operations in Kuwait. However, we still are suboptimal in terms of capacity because we're only operating between 55% to 60% of pre-conflict capacity in Q1 or Q2 of the relative period of last year's compared. So how do we get the strong performance? The first answer we managed yield in the market with cost recovered fuel in a very big way, and we were very disciplined in terms of where we put capacity. Not one flight was put on a market where we had any negative contribution margin. We could not afford that. We needed to make sure that we recovered all the losses in Q1 and also put ourselves in a good position to go through what we now see a very subdued demand in Q3. So yes, we achieved great results in Q2, but the proof will be in the pudding in how we demonstrate our so-called sustained recovery in Q3 and Q4. We are taking a lot of initiatives, as Andrew has addressed on cost, mitigating cost and we're doing a lot of things. Now on the business model, I love the question. I love the question. I think if you look at the question on Richard Quest asked me a question on an interview and car park in Berlin. He asked me whether we are serving drinks and food on our bus services, 9,000 bus services into the Kingdom of Saudi Arabia. I just told him "What would Michael O'Leary do?" Of course, he will charge for it. So Jazeera Airways, at any point in time, if we want to keep the fares affordable and accessible for the customers, we want to keep them. We want -- we have democratized travel in Kuwait in a very big way. Customers can get the lowest fare possible on a basic product today. If you can buy a basic product with only a small hang carry, you'll get the lowest fare in Kuwait across the network. However, if we choose to buy seats, if we choose to buy bags, if we choose to buy a meal, you pay for what we want. Now having said that is this business model any different from any low-cost airlines? No. But I would urge the analysts and even investors now think that full-service carriers are actually demonstrating that they are willing and able to do this. Try buying an economy ticket now on a full-service airline and then try to get a seat, you will be paying between KWD 7 to KWD 25 to your seats, right? If you want to pay for extra baggage, even in European carriers, you are charged for it. So I think this is -- in terms of business model, I call this a responsible business model that we are fully accountable to our shareholders in terms of performance. So we are doing what every low-cost airline is doing today. In fact, I say this to everyone on the call, full service carriers are now shifting towards this model.

Just one follow-up. In terms of the earlier comment made that just to confirm, during the majority of the second quarter, Jazeera Airways was the only airline out of Kuwait?