Kuwait Air­ways in ex­pan­sion mode, seek­ing to add routes

Pos­si­ble ad­di­tions from Wash­ing­ton to Chicago to Seoul

The National - News - Business - - Inside Track -

Kuwait Air­ways is con­sid­er­ing adding a flight to Wash­ing­ton or Chicago de­spite mount­ing US travel re­stric­tions, as the Ara­bian Gulf carrier re­vives long-stand­ing ef­forts to bet­ter com­pete with its more pros­per­ous re­gional coun­ter­parts.

The ad­di­tions, which may in­clude a new ser­vice to Seoul, Manch­ester, Sara­jevo or air­ports in China, Morocco and Saudi Ara­bia, are part of a wide-rang­ing re­struc­tur­ing as Kuwait Air aims to re­turn to profit and lure more high-end cus­tomers, Sami Al Rushaid, its chair­man, said in an in­ter­view.

There will be a “mod­er­ate ex­pan­sion”, said Mr Al Rushaid, not­ing that some routes may start as early as this year. A re­in­state­ment of a US travel ban on peo­ple en­ter­ing the coun­try from six pre­dom­i­nantly Mus­lim na­tions won’t halt the de­lib­er­a­tions. “We will con­tinue with our ex­pan­sion plans re­gard­less.” Kuwait Air­ways, one of the Ara­bian Gulf re­gion’s most suc­cess­ful air­lines be­fore the 1990 Iraqi in­va­sion of the coun­try de­stroyed many of its air­craft, has been try­ing to counter the growth of its big­ger coun­ter­parts Emi­rates and Eti­had Air­ways for years. Its am­bi­tions are be­ing ham­pered by some of the tough­est busi­ness con­di­tions in decades, in­clud­ing re­duced spend­ing power in the re­gion due to low oil prices.

To com­pete more ef­fec­tively in a crowded avi­a­tion mar­ket, Kuwait Air­ways has been aim­ing for a pri­vati­sa­tion since par­lia­ment au­tho­rised a sale in 2008. That plan was re­cently de­layed again af­ter a par­lia­men­tary com­mit­tee in June said it wants the com­pany to re­main un­der gov­ern­ment own­er­ship. If a full sale doesn’t go ahead, the carrier may de­cide to sell in­di­vid­ual units such as cargo and ground han­dling in­stead, Mr Al Rushaid said.

“I’d like to see the pri­vati­sa­tion process pro­ceed,” said Mr Al Rushaid, who took charge of the air­line in April. “We are look­ing at dif­fer­ent ap­proaches.”

Mr Al Rushaid is re­vis­ing the carrier’s re­struc­tur­ing plan and ex­pects it to post a profit by the 2020/21 fis­cal year. Kuwait Air­ways pre­vi­ously tar­geted prof­itabil­ity in 2019.

To help drive the turn­around, Kuwait Air plans to fo­cus on im­prov­ing its ser­vice and fi­nan­cial per­for­mance by adding more lu­cra­tive routes. In re­cent years, Kuwait Air has in­tro­duced a new first-class cabin on its Boe­ing 777 and added a pre­mium econ­omy class. Its ex­pan­sion comes as es­tab­lished car­ri­ers have been try­ing to make up for slow­ing growth by charg­ing ex­tra fees and cut­ting jobs.

Kuwait Air, which com­petes on short-haul flights with the lo­cally based Jazeera Air­ways, flies to 38 des­ti­na­tions, in­clud­ing the big­gest Euro­pean hubs and south­ern Asian cities such as Mum­bai and Bangkok. Its long­est route serves New York via Shan­non, Ire­land.

The carrier’s new long-haul routes would be served by Boe­ing 777 planes that it al­ready owns or has on or­der. Kuwait Air, which still ex­pects to take de­liv­ery of three more 777-300ER mod­els in­clud­ing the fi­nal one in Au­gust, will fi­nance the deals through an ini­tial sale and lease­back agree­ment signed this month with Kuwait-based Avi­a­tion Lease and Fi­nance Com­pany.

The air­line also still ex­pects to take de­liv­ery of 15 Air­bus SE A320­neo planes and 10 A350900s, whose fi­nanc­ing will prob­a­bly be a mix of bank loans and leas­ing, ac­cord­ing to Mr Al Rushaid. Air­craft de­liv­er­ies should be com­pleted some­time in 2021 and there are no plans for any more or­ders.

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