Kuwait Airways’ new chairman and general manager Barrak Abdulmohsen Al-Sabeeh has a clear mandate from the government: prepare the carrier for its long-delayed privatisation. “To me a happy ending is to sell it off,” says a surprisingly blunt Al-Sabeeh.

In mid-October Al-Sabeeh took over as Kuwait Airways’ chief from Sheikh Talal Al-Sabah, who was openly critical of the government’s slow progress in privatising the flag carrier and its interference in management issues. Al-Sabah resigned in September along with the carrier’s entire board after the government rejected their proposed fleet renewal plan, which included 12 Boeing 787s and seven Airbus A320s. Al-Sabeeh says parliament did not agree with the old board’s view that the new fleet would add value to the carrier prior to privatisation. Instead it concluded committing to so many new aircraft could dissuade potential buyers.

Barrak W200He explains: “Our government says: ‘Let the private sector do whatever it wants with this company. Leave it to the new owners. Why should we buy aircraft and they [the new owners] are stuck with it and have a different strategy?’”

Al-Sabeeh is now proposing a short-term fleet plan which includes retrofitting existing aircraft and possibly short-term leases for additional aircraft. He says his new budget includes a cabin upgrade and has the support of the government but the long-term fleet plan will be decided by the new owners. “Availability of aircraft is minimal for leasing or buying, but we’ll look at what’s in the market. I might end up refurbishing the aircraft I have.”

But Al-Sabeeh is as forthcoming and vocal as his predecessor when it comes to stressing the importance of putting Kuwait Airways into private hands. “The proposals of Kuwait Airways will not move forward without privatisation,” says Al-Sabeeh, adding the carrier is “110% better off private”.

“It [privatisation] is a task we’re taking as a board. We’re taking privatisation seriously.”

He adds the industry “is moving very fast” and without privatisation Kuwait Airways will fall further behind other Middle Eastern carriers. Kuwait Airways, he acknowledges, is struggling to compete and privatisation is needed “to allow us to compete with neighbouring county airlines”.

“We’re losing market share. We’re losing resources,” Al-Sabeeh says, noting that Gulf carriers have poached some of Kuwait Airways’ pilots, engineers and managers.

Kuwait Airways also has suffered from the government’s decision in 2005 to liberalise its air transport market, which led to the launch of low-cost carrier Jazeera Airways. Al-Sabeeh says Jazeera is a competitor but it has not had much of an impact yet because it is still a relatively small player with only five Airbus A320s. But with 35 more A320s on order, Jazeera’s impact will become greater. “If we don’t act then they’ll eat us alive,” says Al-Sabeeh.

The government also has approved the establishment of another full-service carrier, Kuwait National Airlines which plans to launch by 2009. “That’s life,” Al-Sabeeh responds. “It’s an open market. May the best win.”

Kuwait National’s launch clearly adds urgency to Kuwait Airways’ long-needed restructuring. Industry observers questioned the government’s decision to open the market before Kuwait Airways could be restructured and privatised. Al-Sabeeh agrees a restructuring is urgently needed but still believes there is time to save the flag carrier. “Kuwait is the most experienced airline in the area. It has the most technical and commercial expertise. The only thing it lacks is freedom and flexibility to make decisions.”

That was the same message throughout Al-Sabah’s tenure but Al-Sabeeh does not seem too concerned he could end up with the same fate. According to Al-Sabeeh: “He [Al-Sabah] was speaking according to the circumstances he was living and he was working with his own initiative. The door ended up shutting on him. It’s a matter of communication.”

Al-Sabeeh adds: “I’m a very transparent person. I’m very clear. I have a task … If I hit a wall too I probably will have to leave. It’s all about circumstances and political changes. The government will support me as long as I have a compelling plan that will look positive in the market - that will regain our image.”

He says his plan focuses on improving the carrier’s services. “We have to work in two parallel lines. The first is to enhance our services and make sure we give a good product to our customers. The other side is we have to work on the privatisation issue. This is the task I’m expected to handle.”

He adds “the tasks we have to address in the medium term is on-time performance and services in general”. Al-Sabeeh acknowledges the carrier’s 6,500 head count also needs to be reduced prior to privatisation. “There is an efficiency issue. There is a benchmarking issue.”
Just about the only thing Al-Sabeeh won’t talk about is how many employees will get the axe. “I’ve been here only a week. Give me a break,” he responds, adding it depends on Kuwait Airways’ new strategy, including if it decides to close city tickets offices and call centres and rely more on Internet sales.

Al-Sabeeh is hoping some of the uncertainty surrounding the carrier caused by the board’s resignation will be resolved over the next few months. He says Kuwait’s parliament should issue a decree at the end of this year or beginning of next year approving the carrier’s privatisation. Due diligence and evaluation of IPO issues will begin next year. “They will then have to make a decision,” Al-Sabeeh says. “There are a lot of steps - financial, legal and marketing. It needs structure.”

Al-Sabeeh is no stranger to Kuwait Airways or the airline industry. In fact, leading Kuwait Airways through its upcoming critical phase is a sort of reunion for Al-Sabeeh. He worked at Kuwait Airways for several years until 2000, holding various posts including director of sales and marketing. He has spent the last several years in the telecommunications industry, most recently as general manager of Kuwait telecom giant MTC, which has operations in over 20 countries. “The airline industry is an interesting industry. It has an addiction,” he says. 

Source: Airline Business