Kuwait Airways : KU : KAC

The Kuwaiti government launched the privatization of struggling flag carrier Kuwait Airways, putting up for sale 35% of the carrier's KWD220 million ($806.8 million) share capital.

The 35% stake in the new Kuwait Airways Co. (KACNew) is not open to "Kuwaiti domiciled airline operators," the Privatization Committee of Kuwait Airways (PrivComm) said in a statement, detailing that only joint-stock companies listed on the Kuwait Stock Exchange or "specialized international companies" are eligible to participate in the sale.

Candidates have until Aug. 25 tosubmit their expression of interest.

According to PrivComm, the "holistic transformation of Kuwait Airways provides a compelling investment opportunity supported by solid economic and market dynamics and the extension of attractive rights and benefits provided by the government of Kuwait. KAC's turnaround potential is underpinned by a business plan that factors in the company's market opportunities and privileges and demonstrates its ability to operate as a profitable standalone airline."

It did not specify the "attractive" rights and benefits, but according to the Financial Times these include a seven-year, 10% discount on fuel (on top of an existing, indefinite 10% discount offered to all airlines operating out of Kuwait), exclusive government business for seven years, and a five-year concession to provide ground services such as catering and passenger and cargo handling at Kuwait International.

PrivComm said that the Kuwait Investment Authority will own 20% of KACNew and thus "the airline will retain continuous strategic government support, giving it a competitive edge within the region," it argued.

The financial performance of KU is not made public.

It has reportedly lost money consistently for the past two decades and has in recent years faced increasingly tough competition from Gulf carriers such as Emirates, Etihad Airways and Qatar Airways, regional LCCs and other Kuwaiti operators.

In 2004, the government liberalized the market by allowing the launch of carriers including Jazeera Airways and Wataniya Airways to compete with KU. Wataniya ceased operations earlier this year ([Vous devez être inscrit et connecté pour voir ce lien]).