Monday, October 31, 2011

Kuwait Airways .... Privatization The Way Ahead

Finally, the government of Kuwait has decided to provide the legal framework for the restructuring of Kuwait Airways as a precursor to its privatisation (read full story). The PrivComm has recommended the restructuring to the government despite the broad expressions of interest in the airline.

The recommendation does not come as a surprise, the airline has several issues ranging from chronic loss making over the last couple of decades. Staffing issues including numbers and productivity, their staff went on strike a week back for better wages. On top of that the airline is being investigated by the Government for corruption.

At last, the project is on the right track, how long the restructuring effort will take is unknown yet, but it will not be easy and probably painful.

Interesting times are ahead, as another GCC airline restructure.

Wednesday, October 19, 2011

The Up Side Of The Arab Spring

A lot was said about the down effect of the Arab Spring on the economies of the region, tourism, investments etc... Nevertheless, the Arab Spring, Euro Zone debt crisis and oil prices have pushed the airlines in MENA to the their limit. There has been winners and losers among the airlines of course but everybody has been adversely affected.

MENA airlines are a resilient bunch and have always been able to transform adversity and challenges into opportunities.

In typical fashion the airlines kept on taking delivery of new aircraft in spite of the down turn and have looked at expansion as a means of countering their problems
- Air Arabia and Flydubai looked towards the CIS and specially the Ukraine among other destinations
- Several airlines started operations to new destinations in Saudi Arabia.
- Gulf Air started flying to Copenhagen, Nairobi, Milan and Geneva with Rome, Entebbe and Juba to follow
  and embarked on a marketing campaign "From the Heart" in an attempt to woo back passengers.
- Royal Jordanian is eyeing Africa with a plan to operate to Lagos, Accra, Nairobi and Addis Ababa in the
  near future in addition to several other destinations.
- Etihad is looking at acquisitions; 25% of Aer lingus and a tie up with Virgin Atlantic if the obtain a stake in
  BMI and are looking to start flights to Maldives, Seychelles, Chengdu, Dusseldorf, Shanghai and Nairobi.
- Emirates is looking at Dallas and Seattle, Lusaka, Harare, Dublin, Baghdad, St. Petersburg, Rio de Jainero
  and Buenos Aires
- Qatar Airways is starting flights to Entebbe, Tiblisi and Baku in addition to increased frequencies.

This is only a glimpse of the proposed expansion which comes on top of additional frequencies to existing destinations.

The profit forecast for 2011 has been increased from a 100 Million USD to 800 Million USD by IATA, as airlines started recovering from the Arab Spring and restoring flights to Egypt, Tunis and Libya.  The bulk of these profits will probably be generated by Emirates with Dubai slated to become the second largest airport in the world. Definitely several airlines will reduce their earlier losses and may break even by the end of the year.

The region has survived 2011 but 2012 promises to be a tougher year.


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