Kuwait Airways may defer fleet decision until after privatisation

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

Kuwait Airways’ new chief is pledging to continue to press for the flag-carrier’s privatisation and indicates that it might not resurrect its aborted fleet-renewal programme until after the airline is sold.

The carrier’s plan to acquire 19 aircraft fell through in August, after the Kuwaiti government refused to approve the renewal programme, and the collapse prompted the airline’s board to resign.

Speaking to ATI, flightglobal.com's sister preium news source, at the Arab Air Carriers Organisation conference in Damascus, new Kuwait Airways chairman and managing director Barrak Abdulmohsen Al-Sabeeh said the carrier needed to focus on two parallel strategies.

He says the airline must enhance its service – ensuring that it can offer a quality product, including in-flight entertainment and a modernised cabin – while at the same time tackling the privatisation issue.

Privatisation still requires the appropriate legislation and Al-Sabeeh says the airline is expecting to have the necessary decree towards the end of this year or the beginning of next. Then the carrier will be able to proceed with due diligence and other issues relating to an initial public offering.

“Kuwait Airways with its existing processes will not move forward without privatisation. In this type of industry time is very important,” Al-Sabeeh says, adding that the company is “handicapped in taking decisions”.

He states: “We’ve seen a lot of projects initiated by Kuwait Airways – but which were then implemented by others, and not by Kuwait Airways.”

Al-Sabeeh indicates that the government would prefer to privatise the carrier ahead of a fleet renewal in order to avoid investing in aircraft which might ultimately be incompatible with a new owner’s preferred operational strategy.

He says this means Kuwait Airways could consider leasing aircraft in the interim to satisfy capacity demands, adding: “At that stage we could relax with what we have for the next three or four years.”

But he admits: “Availability of aircraft is minimal for leasing or buying – so the price will be higher – but we’ll look at what’s in the market. I might end up refurbishing the aircraft I have.”

Al-Sabeeh adds that the airline has too many personnel and privatisation will create efficiency and benchmarking issues which will “have to be matched”.

Kuwait’s government has licensed other carriers to operate from the Gulf state, increasing the pressure on Kuwait Airways for greater efficiency.

Start-up Kuwait National Airlines appears to be drawing closer to launch and budget airline Jazeera Airways, already operational for two years, is expanding although Al-Sabeeh does not yet perceive it as a threat.

“Jazeera’s strategy is different,” he says. “[The competition] is not that tremendous now. But if we don’t act then they’ll eat us alive.”