In a loss that even makes Etihad Airways look “ok” in comparison, Kuwait Airways reported a very unprofitable fiscal year.
Kuwait Airways just reported is financials for the fiscal year that ended on December 31, 2018. It losses totaled KD131.9 million ($435MN). In other words, $17MN per aircraft, in just one year!
Kuwait Airways also reported its liabilities exceed its assets by KD208 million ($686MN). Losses were blamed primarily on rising fuel and maintenance costs, although employee costs also rose 11%. Overall, its operating loss was up 40% over a year earlier with the net loss up 25%.
Kuwait Airways a has a fleet of 27 jets, include:
- 10 Boeing 777-300ERs
- 5 Airbus A330-200s
- 12 Airbus A320 family
That’s two more than the 25 aircraft Kuwait Airways was operating in 2015 when it reported the massive loss.
And yet Kuwait Airways isn’t worried. Per Flight Global, the management “does not consider” these staggering losses a “material” concern. In fact, Kuwait Airways received a KD300 million ($989MN) infusion last year to finance aircraft acquisition. Its financial statement states:
“The company’s long-term financial plan envisages an increase in aircraft fleet, increased flight services to profitable sectors and cost optimization with an aim to improve revenue and operational profits.”
That sounds like Thai Airways…
CONCLUSION
I have yet to fly Kuwait Airways, but hope to do so in 2020. That said, I’m not sure how long this charade can continue. In the meantime, I’m waiting for outrage from Delta…
image: Anna Zvereva / Flickr CC 2.0
Airlines is one business that should be completely private or you end up running a socialist enterprise like many in developing world do.
But perhaps it’s also a great cover for corruption which is why politicians are loathe to get rid of it.
Perhaps someday an article about how Emirates was successful and Gulf Air, Saudi Arabian, and Kuwait was not so successful?
My guess is that Dubai is a city with more business travelers. That’s not the only reason. Saudi Arabian has Saudi visa issues to deal with. Bahrain and Kuwait City are smaller than Dubai. Abu Dhabi might be in between as far as business travelers.
I’m from Kuwait and have been flying Kuwait Airways [KU] since I was born, and have family working for them. A cocktail of ineptitude, arrogance and sinister interests are holding it back from any attempt at success – some of these include:
1. The airline is government-owned and bankrolled by the government so no matter their losses, they’ll always get money thrown at them or bailed out. Talks of privatizing the airline have been going on since the early 2000s, and they’ve always proven to be nothing more than a charade to give the government the impression that the airline is trying to function as a professional outfit.
2. As a state, Kuwait guarantees its citizens government employment. KU has some loopholes, but it’s seen by Kuwaitis as a place to get a job, do very little to no work and reap massive rewards and benefits that they believe they’re entitled to. Since Kuwaitis working for the government cannot be fired, they become immune to the idea that they have to do anything since termination is not something that they’ll ever be threatened with.
3. The airline is treated by the government, its employees and their families as a personal playground since they pay highly-subsidized and/or fly for free, and it is mostly used by these people.
4. Mismanagement runs deep in the company: its officials are predominantly political or nepotistic appointees and have little to no business acumen. When a new route opens, rumor has it that they’re opened based on some higher-up’s personal desire to have a direct connection to where they want [i.e. they want to go to Prague in the summer, so they open up a route to Prague that quickly loses money and then is unsuspiciously suspended after the summer] regardless of how well they perform for the company.
5. KU does a very poor job of advertising and marketing itself, and more often than not, its advertising material is unimaginative or riddled with grammar and spelling mistakes.
6. Kuwait International Airport has been operating way over capacity for years, and until T2 opens in 2023/4, is a dreadful facility in its current state. The current systems in place for staples as visas on arrival are convoluted and extremely unfriendly, airport staff are unhelpful or straight-up rude and the airport experience is not designed as a transit hub the way regional airports in Doha, Dubai or Abu Dhabi are.
7. The airline may offer shiny new planes, but service on the ground and in the air is woefully inconsistent, in-flight entertainment offerings weak and the quality of in-flight catering has tanked in recent years.
8. While the airline is competitively priced compared to neighboring airlines like Qatar Airways and Emirates, the fact of the matter remains that it is a dry airline and Kuwait is a dry country.
Ultimately, there’s no incentive for KU to really perform or cut the mustard since they’ll always get away with anything – as long as there’s money on the table. With Kuwait’s latest budget deficit swelling to over 30 billion dollars, let’s see how long that and other factors for Kuwait lasts.