Kuwait Airways to borrow from banks to pay salaries
Parliament approved plan to privatise it in 2008.
August 15, 2010 3:07 by Reuters
Kuwait’s loss-making national carrier Kuwait Airways Corp said on Sunday it will borrow from local banks to pay salaries.
Kuwait is privatising the company and has appointed Citigroup Inc., Ernst & Young and aviation services firm Seabury to handle the process.
“We got the approval of the cabinet to borrow from local banks to support the company’s cash flow including payment of salaries,” company spokesman, Adel Boresly, told Reuters.
He would not say how much the company was borrowing, but daily newspaper al-Watan said in a report earlier on Sunday Kuwait Airways needed 60 million dinars ($208.4 million) in liquidity.
Boresly said the delay in carrying out the privatisation plan which parliament approved in 2008, plus the refusal of the legislature to pass the company’s budgets for the last five fiscal years, were behind the need to borrow.
Under the plan, the government will sell 40 percent of the flag carrier to the public and 35 percent to a long-term investor.
The world’s fourth largest oil exporter is on a drive to boost its private sector and become a regional financial centre.
Its economy is largely dependant on oil revenues and driven by government spending.
(Reporting by Diana Elias; Editing by Jason Benham)