- New law mandates sale of 25 per cent shares to Kuwaiti citizens and employees
- Loss-making airline expects profits within two to three years
- Parliament approval of new law expected within months
The Kuwaiti cabinet has granted the Communications Ministry approval to proceed with the privatisation of Kuwait Airways.
The privatisation structure is understood to include the sale of 20 per cent of the airlines shares to Kuwaiti citizens and 5 per cent to current and retired employees, with the government retaining the rest.
The new structure still requires the approval of the National Assembly, however, prior to implementation. News of its approval has been talked about since June, but it remains unclear when the parliament will actually vote and approve the proposed law.
Kuwait Airways CEO, Abdullah Ahmad al-Sharhan, said he expects parliament approval in the next few months.
Plans to privatise Kuwait Airways date back to 2008, when parliament first granted approval for the sale of 75 per cent of its shares to the public. An underwhelming response from investors at the time forced the government to review the privatisation plans.
A second law that superseded the first one was approved in 2012, while a third one was further approved in 2014. None of the laws reached the implementation stage.
Privatisation is seen to help address the airlines chronic operational and fiscal inefficiencies, and allow it to compete with the other rapidly growing airlines in the GCC, such as Dubais Emirates airline, Qatar Airways and Abu Dhabis Etihad Airways.
Kuwait Airways has recently turned to external sources to raise funds. The National Bank of Abu Dhabi (NBAD) and Bahrain-headquartered Arab Banking Corporation arranged a $400m Islamic financing contract for the airline in May. The fund was utilised for leasing five Airbus A330-200s.
Al-Sharhan has indicated he expects the airline to turn in profits within two to three years, UK-based Reuters reported on 20 October.
The airline has reported consecutive losses over the past several years, including $109m in losses in 2014. Al-Sharhan said he is aiming to bring the losses down to $63m in 2015.