Kuwait National Airlines delays vote on capital increase

Vote depends on final talks with Alafco to scale down $70 claim over aircraft leasing deal
Kuwait National Airlines delays vote on capital increase
HOLDING COMPANY: Wataniya Airways is owned by Kuwait National Airlines Co
By Bloomberg
Tue 31 May 2011 12:56 PM

Kuwait National Airlines Co (KNA) shareholders voted to postpone a vote on raising the company’s capital to KD65m ($236.2m), a step which may pave the way for the company’s return.

Kuwait National Airlines, which halted operations on March 16, will use the increase of KD15m “to repay immediate liabilities and the remainder will be available for if shareholders decided to resume operations,” Chairman Abdul Salam Al Bahar told investors attending the annual general meeting on Wednesday.

Shareholders will decide on the capital raise depending on whether the company’s board reaches an agreement with Alafco Aviation Lease & Finance Co to scale back its demands. Alafco, the Kuwaiti company that leases planes to airlines, said April 3 it is demanding $70m from Wataniya Airways, owned by Kuwait National Airlines Co, for the remaining period of an aircraft leasing deal.

“We are in the final phases of the negotiations with Alafco to reduce their demands,” Al Bahar said. “They are responsive but there is nothing official yet.” The negotiations will be completed within ten days, he said. “Whether we come back or not depends on the settlement we reach with Alafco.”

Kuwait National Airlines owes banks as much as KD22m, and is KD15m in debt to other creditors, Al Bahar said. “If Kuwait National Airlines is to re-operate, it’ll be through a different approach.”

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