Kuwait Airways Corporation (KAC) announced it has received offers for partnership from investment banks, auditing companies and aviation companies to promote shares in the company and supervise a tender for a strategic partner (KUNA, 26-Jul-2010). KAC will also be cooperating with World Bank to review the offers by 01-Aug-2010. Last week, KAC Chairman and Managing Director, Hamad al-Falah, stated the privatisation of the airline is on schedule. On 03-Mar-2010, the Constituent Committee commenced the implementation of law 6/2008 to privatise the company, with Kuwait Investment Authority (KIA) to establish the new company. The committee has completed a draft of the contract of establishment and company charter and appointed Abdul Hameed Al-Sarraf and Partners, with Baker and McKenzie for advisory services.
Kuwait Airways Corporation on track for share sale and privatisation
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Why so unprepared? It seems inconceivable that the structure of an industry with so many artificial constraints can remain intact much past 70 years, while all around it has changed.
This decade alone has been witness to major disruptions in the travel and transportation industries. Most prominent have been in ride sharing – Uber – and in hospitality – Airbnb. Telecommunications, media and music industries have also been turned on their heads; banks and payments are in the firing line; retail generally is being rapidly transformed. There is scarcely an industry whose fundamental structure remains intact. Except the airline industry.
In all cases disrespectful startups, usually applying relatively simple but sophisticated IT solutions, have taken on legacy operations. The legacy industries under attack typically involve extensive capital investment, and are often characterised by significant, unhelpful, and highly intrusive government regulation that restricts competition.
Certainly the legacy airlines have had to deal with a new breed of low cost operations, long and short haul. But almost without exception those legacy operators are still there, fundamentally unchanged.
In terms of other industries, this is no more than fiddling around the margins. And time is running out.