US embassy cable - 04KUWAIT4513

C O N F I D E N T I A L KUWAIT 004513 
 
SIPDIS 
 
E.O. 12958: DECL: 12/27/2014 
TAGS: EAIR, KPRV, KU, BEPX 
SUBJECT: FUTURE OF FALTERING KUWAIT AIRWAYS 
 
 
Classified By: Ambassador Richard LeBaron for reasons 1.4 (B) and (D) 
 
1.  (C) Ambassador met with Kuwaiti Minister of 
Communications, Planning and State for Development of 
Administrative Affairs Shaykh Ahmed Abdullah al-Ahmed 
al-Sabah on December 27, 2004 and discussed the financial 
situation of Kuwait Airways and the recent announcement of a 
new airline opening in Kuwait.  (NOTE: His Ministry also 
supervises Kuwait Airways and Civil Aviation.  END NOTE.) 
Kuwait Airways is losing 20 million USD every year to 
interest on outstanding debts, according to the Minister, and 
straightening it out is going to be "a bumpy road."  The 
Minister outlined his priorities for the failing state-owned 
airline:  his first priority is to get its accounts 
straightened out and approved by parliament.  After that he 
said that the plans are to restructure the airline into a 
more market-orientated organization although it would still 
be state-owned.  He is using an international consulting firm 
to help develop the restructuring plan.  Finally, he would 
like to eventually privatize Kuwait Airways. 
 
2.  (C) The Minister also mentioned that Kuwait Airways is 
looking to update its fleet of airplanes.  The Ambassador 
informed the Minister that the CEO of Boeing is planning to 
visit Kuwait and the Minister expressed interest in meeting 
with him then.  Currently only two of the 15 planes in use by 
Kuwait Airways are Boeing planes; the remaining are Airbus. 
 
3.  (C) Jazeera Airways, the first privately owned airline in 
Kuwait, was also discussed during the meeting. The Minister 
acknowledged that the new airline, expected to start regional 
flights in February 2005,  would put pressure on Kuwait 
Airways to be more competitive.  (NOTE: The Boodai family, a 
prominent Sunni family heavily involved in private business 
in Kuwait, is the major shareholder of the 
unfortunately-named Jazeera Airways.  The company's president 
is Marwan Boodai.  END NOTE.) 
 
 
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LEBARON