Kuwaiti ALAFCO (Aviation Lease and Finance Company) annual financial results demonstrated the heavy losses aviation sector around the world suffered due to COVID-19 repercussions.
However, the 10 million Kuwaiti dinars losses are less worse than expected in light of the great global crisis. Because, the airline’s business model protected it from more losses compared to other airlines.
The company’s operating income relays on leasing new aircraft and re-leasing previous aircraft.
The company mentioned proactive measures and precautionary steps that reduced its losses. They include structuring financing entitlements as well as postponing purchasing agreements.
The fall of aircrafts value, lack of buyers and rise of allowance for credit losses caused ALAFCO profits to fall.
Kuwaiti ALAFCO said in a report that its order book has been rearranged with Boeing. The company reduced the number of aircrafts ordered from 40 to 20.
The company also rescheduled aircraft delivery to keep pace with the developments of the current aircraft leasing market.
These measures would reduce future capital obligations and reclassify certain items in the financial statements of the company.
It is worth noting that the company owns 76 aircrafts and has leased them to 23 companies from 17 different countries.
Last year, the company achieved a net profit of 17.7 million dinars.
It appears that aviation sector and its industries recovery may take a longer time than expected.
Especially, in light of the COVID-19 pandemic and the emergence of new strains of it, where some countries are shutting down again.