KUWAIT AIRWAYS PRIVATIZATION IN DOUBT

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By TESTCustomwebLP TESTCustomwebLP August 4, 2011 09:04

KUWAIT AIRWAYS PRIVATIZATION IN DOUBT

Although the Kuwaiti government has succeeded in convince the majority of Kuwait Airways’ 2,600-plus staff to retire, or take other government jobs, in order to cut its crippling wage bill, it may struggle to find a buyer for the 35% stake in the airline at the price it was hoping for.

The government expects the post-privatised share capital of the airline to be around 220 million Kuwaiti Dinars – valuing the 35% stake at $282 million – but that was based on 2009 estimation and shares in airlines have fallen since then.

Government restrictions will also reduce the bidding pool considerably as Kuwaiti airlines aren’t allowed to bid and other airlines in the region are owned by rival government and so unlikely to place a bid. A bid is therefore dependent on international airlines that have routes to the Gulf being interested.

Kuwait’s promise to provide cheaper fuel to Kuwait Airways could be viewed as state aid and plans for a rail network linking Gulf countries could also put bidders off. A lower starting price for the stake might be necessary to attract more bidders.

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By TESTCustomwebLP TESTCustomwebLP August 4, 2011 09:04
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