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Kuwait Airways searches for buyers for 35 percent stake in the struggling Gulf carrier
DUBAI, United Arab Emirates (AP) ' Kuwait Airways is seeking a buyer for a 35 percent slice of the struggling national airline as it embarks on a long-awaited turnaround plan.
A government committee said Monday it is accepting offers from investors for the stake as part of a 220 million dinar ($807 million) privatization effort. Most firms listed on Kuwait's stock exchange will be able to bid, but other Kuwaiti airlines will not. Also eligible to bid are "specialized international companies," which could include foreign carriers.
"Any sale of the company must realign the airline towards a successful future entity that builds on the aspirations of the Kuwaiti people and the past successes of this national institution," the privatization committee said.
Kuwait Airways operates a fleet of 17 jetliners that mainly fly to Europe, the Middle East and Asia. It is the country's oldest airline and the local market leader, but it is burdened with bloated labor costs and has struggled financially for years.
In fiscal 2010, the carrier brought in $771 million in revenue but posted a loss of $556 million, according to a government-prepared presentation for potential investors obtained by The Associated Press.
The government hopes to revitalize the airline with the privatization. It has offered the carrier's 2,600 Kuwaiti employees the chance to retire or move to another government job in an apparent effort to trim labor costs. Employees have the option of sticking with the newly privatized carrier, and it was unclear what the company may be hoping for in terms of cuts.
Kuwait's parliament approved a framework for privatizing the company in 2008. Besides the stake sale, the government plans to float part of the company on the stock market and offer some shares to employees. The Kuwait Investment Authority, the country's sovereign wealth fund, will hold a 20 percent stake in the airline following the privatization.
Kuwait Airways faces competition at home from discount carrier Jazeera Airways, whose ownership is split among several Kuwaiti companies and public shareholders.
Until recently, it also competed against Wataniya Airways, which offered high-end services to travelers mostly in the Middle East. Wataniya quit flying in March, leaving its future uncertain.
Kuwait Airways is far smaller than fast-growing regional rivals such as Dubai's Emirates or Qatar Airways, which have turned the Gulf into a long-haul transit hub. Neither company responded to requests for comment on whether they might bid for the Kuwait Airways stake. Abu Dhabi's Etihad Airways, another booming Gulf carrier, declined to comment.