1-Aug-2011 1:14 PM

Kuwait Airways to commence privatisation negotiations this month

Kuwait Airways Corporation is reportedly due to commence negotiations with undisclosed parties in early Aug-2011 on a potential management contract for the carrier and a 35% ownership offering (Financial Times, 31-Jul-2011). The carrier’s share capital is valued at approximately USD802 million, valuing the 35% stake at USD280 million. Under the 2008 privatisation act, 35% of the carrier will be sold to a private strategic investor, 40% will be sold via an IPO and the government will retain a 20% stake. The employees share trust will control a 5% stake. Kuwaiti national at the carrier have been offered the choice staying at the carrier under privatisation, transferring to another government job or early retirement, if eligible. To encourage potential investors, the Kuwaiti government has reportedly offered the following deals:

  • 10% discount on fuel for seven years, on top of the existing 10% fuel discount offered to local Kuwaiti carriers;
  • Exclusive government travel contract for seven years;
  • Five-year concession to provide ground and airport services at Kuwait International Airport, including catering and passenger and cargo handling
  • Indefinite exemption from customs taxes and charges for aircraft spare parts in the GCC.

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