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Kuwait Airways privatisation continues despite losses and corruption accusations

Posted 1 July 2010 · Add Comment

Kuwait parliament has approved the 2010-2011 budget of the state-owned Kuwait Airways Corp. (KAC) with a projected deficit of $180 million as the airline heads towards privatisation.

The airline's revenues for the coming year are projected at $853 million while expenditure is estimated at $1.033 billion. The fiscal year  ends March 31, 2011.

KAC chairman Hamad Al-Falah was reported in May as saying the carrier ihad lost around 190 million dollars during 2009-10. KAC has posted a loss in all but one of the past 20 years since the country was invaded by Iraq and its fleet allegedly stolen by the retreating Iraqi armed forces. This has led to acumulated losses of more than 2.5 billion dollars.

The airline is currently steeped in controversy. In March, the government formed a committee to probe allegations of widespread corruption in the carrier and vowed to refer the findings to the public prosecutor. Parliament rejected a motion to suspend the privatisation until the audit bureau had reported its findings. According to government minister Mohammed al-Baseeri, the investigation is now complete.

Parliament however rejected a recommendation from opposition MPs that called for suspending the privatization of KAC until the accounting watchdog Audit Bureau conducts a probe into graft allegations in the airline.

KAC will be transformed into a private company with a 35-percent stake to be sold at auction to foreign or local investors and 40 percent to be sold to Kuwaiti citizens in an initial public offering.Twenty percent will be reserved for state-run institutions and the remaining five percent will be distributed for free to the Kuwaiti employees.
The airline has a fleet of 15 Airbus and two Boeing aircraft which it bought in the early 1990s

The airline has an ageing fleet of 15 Airbus and two Boeing aircraft which it bought in the early 1990s but is currently fighting the Iraq government for a $15bn compensation for the theft of its fleet. The ongoing court case in the British High Court is the longest damages case in UK legal history .

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