KUWAIT CITY, 20 February 2004 — The chairman of the state-owned Kuwait Airways (KAC), which has faced serious financial problems for a decade, has offered his resignation, citing lack of government support, a newspaper reported yesterday.
In his resignation letter published by Al-Qabas, Ahmad Al-Zaben accused Kuwait’s Finance Minister Mahmoud Al-Nouri of failing to “provide the necessary support to overcome the difficulties and obstacles” facing KAC. He also accused the minister of “orchestrating” problems within the KAC board of directors and of “gravely distorting my image ... in a bid to use me as a scapegoat,” for troubles faced by the airline.
The national carrier has suffered from cashflow problems and debts which peaked at $1.4 billion after the August 1990-February 1991 Iraqi occupation of Kuwait, when it lost 86 percent of its capital. KAC took a loan of $1.3 billion for rehabilitation after the emirate’s liberation in the Gulf War and has so far repaid about $1.2 billion, including interest. More than $500 million of the original loan, in addition to interest, is outstanding.
The outspoken parliament has refused to approve the carrier’s financial statements for the past six fiscal years, thus depriving it of government aid and forcing it to borrow more. Last week, Nouri issued a stern warning to the board of directors to reform or be sacked after accumulated losses in the past 11 fiscal years topped 530 million dinars (about $1.8 billion).
In 1999-2000, KAC posted a profit of $77.2 million after gaining $795 million from a case it filed against reinsurance companies for damages during the Iraqi invasion.
Zaben is the second KAC chairman to resign since 1999, when former chief Ahmad Al-Mishari quit over cashflow problems and allegations of mismanagement.
In his resignation letter, Zaben insists that one of the main factors causing cashflow problems at KAC was high pay to nationals.
