Kuwait Airways to buy 20 new planes
Wednesday, 23 January 2013 17:18
Posted by Shoaib-ur-Rehman Siddiqui
KUWAIT CITY: Kuwait's national carrier plans to buy up to 21 new aircraft over the next two years after parliament on Wednesday passed a key bill transforming it into a commercial company, its chairman said.
"Initially we plan to replace the current old fleet of 17 aircraft. We look to purchase 20-21 new aircraft within the next two years, and the process will be gradual," Sami al-Nasef told AFP after the parliamentary session.
Nasef said it was still premature to put a price on the planned purchase of aircraft, half of which will be small and the other half large.
He told reporters the airline is already discussing the purchase with manufacturers.
Nasef, who was appointed chairman in November, told MPs during the debate that only 10-12 aircraft of the carrier's ageing fleet were operational and the remainder were under "extended maintenance."
Kuwait Airways has a fleet of 15 Airbus and two Boeing aircraft that were acquired about 20 years ago, but some of which have had technical problems over the past few years.
Twenty-nine MPs, including cabinet ministers, voted for the bill to turn Kuwait Airways Corp. into a shareholding company operating on commercial basis. Nine MPs rejected the bill and six more abstained.
Under the bill, initially issued by the emir in October when parliament was dissolved, the government will pay all losses incurred by KAC and estimated by some MPs at more than $1.5 billion (1.1 billion euros).
The aim of the new company is to restructure the airline and make it profitable before completely privatising it by inviting foreign or local investors to bid for 35 percent of the privatised company.
The new bill was issued after the government failed to implement a January 2008 law to privatise KAC within three years.
Communications Minister Salem al-Othaina, who oversees KAC, told parliament on Wednesday the privatisation process had faced major difficulties as it came at the onset of the global financial crisis.
As a result, no investors offered to buy shares in the carrier, he said.
Othaina said that during the past four years, it had total losses of $1.0 billion, and warned that it was becoming extremely difficult to get spares for its ageing fleet.
Kuwait Airways has posted a loss in all but one of the past 21 years, amounting to more than $2.7 billion. Such losses are covered by the state because the carrier has been entirely government-owned.
