Draft law would still see 35 percent stake in national carrier listed on bourse
Kuwait's cabinet approved an amended draft law on Sunday paving the way for the privatisation of Kuwait Airways within three years, state-run news agency KUNA reported, after restructuring at the troubled carrier delayed the original plan.
Kuwait's parliament first approved a plan to privatise the loss-making Kuwait Airways in 2008, but the process has been repeatedly held up. The committee responsible for the privatisation last delayed the plan in October, saying the company would concentrate on restructuring first.
Under the new draft law, which still needs to be approved by the National Assembly, the government still plans to offer a 35 percent stake in the airline to companies on the country's stock exchange and to "specialised" local or international firms, KUNA said.
This auction should happen within the next three years, it quoted Communications Minister Salem al-Athaina as saying.
The stake would go to the highest bidder and the shares would not be allowed to be traded for three years, it said.
The carrier will change its name to Kuwait Airways Company and be a shareholding firm "which would consequently own all assets and properties of KAC," KUNA said.
The government will retain a 20 percent stake, as previously planned, while 5 percent will be distributed to KAC employees "equally and for free," the agency said.
A further 40 percent will be allotted in the same way to citizens registered with the Public Authority for Civil Information, the Kuwaiti body that issues civil identity cards.
They would not be allowed to trade the shares for one year.
The original plan had proposed selling a 40 percent stake to the public. It had also envisioned a price of around $282 million for the 35 percent stake offered to a long-term investor, seen by some analysts as too high. The KUNA story did not give any price estimates.
KAC employees that did not want to work for the new company or be reassigned to the government would be offered a three-year salary pay-off, KUNA said.
Citigroup, auditors Ernst & Young, and aviation consulting firm Seabury have been handling the process according to previous government statements on the plan
This is like a broken record, they have been saying this for the last decade. Then when it comes time to privatise they back out. It is imperative that this airline privatise in order to keep flying, they are flying on their last wing, they are operating in a shattered state of affairs. Airlines are like diplomats, they represent their governments, when the airline is running in a rundown condition it is reflective of the status of their government. They need to overhaul this carrier, implement a new management team and purchase new airplanes and most importantly work on their customer service which is autrocious.
5% share to Kuwaiti employees free. Also, 40% free to rest of Kuwait citizens; and 20% for the govt. This means 65% shares of the new company will be the burden of anyone who invests the remaining 35%. Currently, the only asset of the company is its head quarter and services establishments (land, building and equipments). 20+ years old aircrafts are also a liabilty. The new company has to start operations with new leased or purchased aircrafts. Hence, this looks like quite a big investment for 35% investors whose money and management efforts will be enjoyed by 65% other share holders without paying a penny. If this is not true, will somebody please clarify. Moreover, the parliament may have other ideas. So, the proposal may die again.
280 MILLION FOR 35% STAKE IN A LOSS MAKING AIRLINES WITH 17 PLANES 4000+ STAFF IT WILL NEVER FLY TYPIALLY THERE IS TOO MANY STAFF FOR TOO FEW PLANES AND THE EMPLOYEE ISSUES THAT WILL COME FROM REDUCING IT MEANS NO PROFIT FOR YRS SO WHY WOULD ANYONE INVEST???
I WAS RECENTLY ON A FLIGHT THE INFLIGHT SERVICE WAS POOR
TOO MANY BATTLES TO FIGHT WAIT 2-3 YRS PICK UP SHARES AT LOW PRICES YOU MAY HAVE A CHANCE BUT 1BILLION PLUS FOR AN AIRLINE THAT HAS NEVER MADY MONEY WHY