Kuwait's cabinet approved an amended draft law paving the way for the privatization of Kuwait Airways within 3 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 privatize the loss-making Kuwait Airways Corp (KAC) in 2008, but the process has been repeatedly held up. The Committee responsible for the privatization 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% stake in the airline to companies on the country's stock exchange and to “specialized” local or international firms, Kuna said.
This auction should happen within the next 3 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 3 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% stake, as previously planned, while 5% will be distributed to KAC employees “equally and for free,” the agency said.
A further 40% 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% stake to the public. It had also envisioned a price of around $282 million for the 35% stake offered to a long-term investor, seen by some analysts as too high. Kuna 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.
Source: Reuters; Kuna
