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Based in Kuwait City and wholly owned by the Kuwaiti Government, Kuwait Airways is the national carrier of Kuwait. From its base at Kuwait International Airport, the carrier operates an extensive network within the Middle East as well as scheduled international services to the Indian Subcontinent, Africa, Asia, Europe and North America.
Location of Kuwait Airways main hub (Kuwait International Airport)
198 total articles
40 total articles
Kuwait aviation poised to deliver at last, but Kuwait Airways restructure, airport upgrade essential
After a rough two decades for Kuwait Airways, there are signs that the carrier could be finally at the beginning of a major turn-around.
The decks are cleared for a new take-off.
In Jan-2013 the Kuwait parliament gave its final sign-off for the carrier’s privatisation legislation and agreed to pay off its heavy losses. An agreement on fleet renewal, at least a decade overdue, appears to be close to fruition after the failure of several agreements in recent years. And the airline has also settled its long-running dispute with Iraqi Airways over war reparations, with a USD500 million settlement also ratified by the Kuwaiti National Assembly.
In a landmark development for their national carriers, Kuwait and Iraq have reached an agreement to the long running dispute over Iraqi Airways' debts to Kuwait Airways. The USD500 million settlement ends a conflict which has plagued the development of both airlines and also paves the way for the development of a joint Iraqi-Kuwaiti airline venture.
The two countries have initialled a final settlement agreement, under which Iraq agreed to pay Kuwait USD300 million in reparations over the destruction and seizure of Kuwait Airways assets during the 1990-1991 Gulf War. In addition, Iraq pledged to provide another USD200 million for a joint airline venture between the two nations. The funds for the joint venture will be paid in 1H2013. It is not yet clear what the new joint venture carrier will look like or what roles Kuwait Airways and Iraqi Airways will play in its establishment.
It is a hard ask to sell a product that is losing money, but that is what the Kuwait Government has been attempting to do with the privatisation of Kuwait Airways Corporation (KAC). Despite the carrier’s inherent potential – a potential amplified by its position as the national carrier of one of the Gulf regions’ riches oil states – the airline was always going to be a tough sell to investors.
Legislation for the privatisation has been in play since Jul-2008, but privatisation appeared to be largely stuck in red tape. In concert with this, the delays to the valuation and financial analysis of the airline, the state of competition in Kuwait’s local air market and the general global economic situation and the ongoing operational and structural problems at the carrier, all conspired against the process.
The drawn out privatisation of Kuwait Airways Corporation (KAC) may be entering a new and decisive phase, with reports emerging that the carrier could enter talks with potential investors for a 35% stake in the carrier and management rights as early as this week. Citigroup, Seabury and Ernst & Young have been advising on the privatisation since Aug-2010. Submissions of expressions of interest are due by 25-Aug-2011.
The ripples from the Arab Spring continue to spread. Air Arabia, the largest LCC in the Middle East, announced in Jun-2011 that it would delay the launch of its Jordanian JV due to the downturn in traffic in the region, as well as higher oil prices. While the political and social environment in Jordan is described by the carrier as “stable”, Syria, Bahrain, Egypt and Tunisia still have not resolved local political instability.
Kuwait Airways has been unable to staunch the heavy flow of losses but the Kuwait government appears to be pressing on with the proposed privatisation of the carrier regardless. Despite Chairman and Managing Director Hamad Al-Falah reporting the carrier suffered a loss of KWD76 million (USD276.3 million) for FY2010/11 on 20-Jun-2011, just five days later the Privatisation Committee of Kuwait Airways Corporation (PrivComm) announced analysis of the carrier and the Kuwaiti market has “identified a clear investment opportunity for a restructured national operator”.
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