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At last! Kuwait Airways gets privatisation go-ahead but fleet renewal stays on hold

Posted 27 January 2013 · Add Comment

Kuwait Airways new chairman confirmed that the airline does have plans to renew its aircraft fleet but has not yet determined the number of planes it would be ordering or of a delivery deadline for the move.


"Determining the exact number of planes or the dates of delivery is directly related to our fleet renewal strategy and the delivery schedule of aircraft manufacturers," the new chairman, Sami Al-Nisf , told the Kuwait state news agency.
The comments followed the long overdue final agreement by Kuwait's National Assembly (parliament) on Wednesday to give the green light to the government to start the much-quoted privatisation for the struggling national carrier
It took long  heated deliberations before the parliament endorsed and referred to the government an amended draft law paving the way for the privatisation of the loss-making state-owned company to go ahead.
The bill was passed by 29 votes in favour to nine against, with six abstentions.
According to the new legislation, the carrier will change its name to Kuwait Airways Company and be a shareholding firm which would consequently own all assets and properties of KAC, except for its dues on Iraqi government and Iraqi Airways.
The KAC's dues on Iraqi Airways and government will return to the state treasury, the bill stated.
It also stipulated that the new company has no right to abandon or assign any of KAC's concessions, tariff exemptions and other advantages or rights. The new firm has to abide by the still valid contracts with other entities.
The government will cover all losses experienced by the KAC in the past years.
Any KAC employees who do not want to work for the new company or be reassigned to the government will be offered a three-year salary pay-off.
Kuwait Investment Authority Board will be in charge of the tasks of KAC's regular and extraordinary general assemblies.
Minister of Communications Salem Mutheeb Al-Utheina underscored the necessity of the move to help KAC turn into a profit-making company.
Al-Uthenia admitted that Kuwait Airways faces several challenges, including high labour costs, an aging fleet and stiff competition from other Gulf carriers.
"It is no secret, His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah wants to turn Kuwait into a regional financial and commercial hub and the role of airlines in achieving this goal is very clear," the minister said
The airline has been pushing the Kuwait government for investment in new aircraft for more than seven years – it was thought the airline was close to agreeing a deal for Airbus A350s but the financial downtown and continued losses from the airline saw this plan shelved.


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