Thu, Jan 10, 2008
Sign Of Increased Privatization In Mideast Nation
It's one small step for
capitalism... and a potentially giant leap for the continued
existence of Kuwait Airways. On Wednesday, the Kuwaiti parliament
approved the long-delayed, government-backed plan to sell 40
percent of the troubled airline to the public, and another 35
percent to a long-term investor within the next two years.
Reuters reports the plan would give the government a 20-percent
stake in the airline, with airline workers holding the remaining
five percent. Under terms of the plan, which must be approved by
the head of state, a Kuwaiti firm could bid for the 35 percent
stake -- so long as that company isn't a domestic aviation
business. Qualified "specialist foreign firms" could also bid.
The government will appoint two advisers to assign a valuation
to the carrier, ahead of a sale.
Managers at the airline have wanted to privatize Kuwait Airways
for some time, but government deputies opposed the move out of fear
it would lead to job cuts. As part of the newly-announced sale
plan, deputies were able to obtain assurances the government would
hire any Kuwaiti workers terminated from the airline. The carrier
will also offer early retirement packages.
The carrier lost most of its fleet in the 1990 invasion by Iraq,
which led to the first Persian Gulf war. Kuwait Airways now flies a
17-plane, predominantly Airbus-sourced fleet.
As ANN reported, in August
the carrier cancelled a $3 billion order with Kuwait's Aviation
Lease and Finance Co (ALAFCO) for seven new Airbus A320s, and 12
Boeing 787s. Company officials say no new aircraft purchases are
planned until the sale is finalized.
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