Carrier Did Not Receive Proper Government Approval

Kuwait Airways' order for 19 new aircraft from Aviation Lease and Finance Co. (Alafco) has been cancelled. The $3 billion dollar deal, for seven Airbus A320s and 12 Boeing 787 Dreamliners, failed to meet proper government approval, according to BBC News.

"Alafco received a letter from Kuwait Airways saying it has not obtained the necessary government approval to sign a final deal with Alafco," said company told the Kuwait stock exchange in a statement.

"The deal to supply 19 aircraft to Kuwait Airways has not been approved by the Kuwaiti government, so the letter of intent is now canceled." said the letter.

Kuwait Airways was to pay a 10% to 15% early delivery fee for the aircraft as the carrier was in a hurry to replace its aging fleet, a Kuwaiti investor told Zawya Dow Jones.

But, the carrier's continuing financial troubles likely forced the government to block the purchase.

The carrier placed the order to improve its current fleet and deliveries were to take place between 2009 and 2014 according to the initial agreement that was signed in June.

Shares in Alafco fell a full seven percent after the announcement.

FMI: www.alafco-kw.com, www.kuwait-airways.com