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Kuwait Airways privatisation 'a clear opportunity'

Advisory team delivers upbeat analysis on ailing Mideast airline.
NEWS, Aviation

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Officials behind the plan to privatise Kuwait Airways said on Saturday they have been encouraged by the findings of an advisory team on the future of the airline.

The Privatisation Committee of Kuwait Airways (PrivComm) said it would now be going forward with the privatisation process although no date was given for its completion.

PrivComm appointed an advisory team in August 2010 to lead the execution of the process. It included Citigroup Global Markets Limited, Seabury and Ernst and Young.

They jointly undertook detailed analysis of the financial and operational performance of KAC and have now concluded that there was a "clear investment opportunity for a restructured national operator".

Despite the difficulties of KAC's current operating business structure, as well as its operational and financial performance, the findings identified a "number of underlying positive factors relating both to the sector and the wider dynamics of the Kuwaiti economy".

Kuwait Airways said on Monday it made losses of KD76m ($276m) in the 2010-2011 financial year, driven by rising fuel costs.

Hamad Al-Falah, chairman and managing director, said that most of the airline's revenues were spent on annual maintenance on its fleet of 17 aircraft, amounting to KD36m, in addition to KD75m spent on fuel.

PrivComm said it was encouraged by the findings of the analysis, adding: "There is a need to liberate the national aviation sector to ensure fair competition and to offer attractive investment opportunities for local and foreign investors."

PrivComm added that its responsibility was to "deliver the best deal for the people of Kuwait".

"Any sale of the business must ensure the best financial return for the government, reduce the airline's dependence on public subsidies and ultimately help to create a national airline that effectively serves the people and economy of Kuwait. These objectives will determine how the restructuring of the airline moves forward," it added in a statement.

KAC is the leading carrier in Kuwait with a 2010 market share of 31 percent by passengers transported.

The Kuwait aviation market has one of the highest expenditure levels on business travel in the region with $1.3 billion spent in 2010, underpinned by the country's high level of GDP per capita.

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