Albergineman
29th Aug 2007, 06:53
Kuwait Airways cancels $3 billion aircraft order
KUWAIT CITY: Kuwait Airways cancelled an initial order for 19 passenger planes worth about $3 billion from a local firm, raising the prospect it will go direct to manufacturers Boeing and Airbus.
Kuwait's Aviation Lease and Finance Company (Alafco), which rents out and sells aircraft, said state-owned Kuwait Airways cancelled the order because it failed to get government approval.
"The letter of intent signed with Kuwait Airways for the supply of 19 aircraft is considered cancelled," the leasing company said in a statement on the Kuwait bourse website.
The loss-making airline was ordering the new aircraft from a lessor rather than direct from the manufacturers because it wanted delivery between 2009 and 2014.
Alafco had already ordered the 787s and would have been able to deliver sooner than the manufacturers.
"Now Kuwait Airways can go straight to the manufacturing companies and order their aircraft from them without having to pay a 10 to 15 per cent premium," said Karim Murad, a transport analyst at Dubai-based Shuaa Capital.
The carrier, which operates a fleet of 17 mainly Airbus planes, will have to delay its fleet renewal programme or perhaps offer planemakers an incentive for the early delivery of some of the planes, Murad said.
Shares of Alafco, which surged 15pc during the four trading days before it announced the Kuwait Airways in June, plunged 7.2pc on Tuesday, their biggest one-day fall in almost 11 months.
Alafco said in June it had reached initial agreement with Kuwait Airways to sell it 19 Boeing 787s and Airbus A320 aircraft.
A Kuwait Airways official said at the time that the order for 12 787 "Dreamliners" and seven single-aisle A320s was worth about $3bn. The carrier also took options for seven more A320s.
Kuwait Airways lost most its fleet - 15 planes - during Iraq's 1990-1991 occupation of the Gulf oil producer, according to its website.
The carrier may spend as much as $6bn to replace and expand its current fleet, Chairman Talal Mubarak Al -Sabah said earlier.
An A320 costs about $136 million at list prices and a 787 between $146m and $200m, depending on the version, according to the websites of the two plane makers.
That would value the Kuwait Airways order at $952m for the Airbus aircraft and between $1.75bn and $2.4bn for the Boeing planes.
Kuwait Finance House, a bank that operates according to Islamic principles that ban the receipt of interest, controls Alafco. Its shares were unchanged yesterday.
KUWAIT CITY: Kuwait Airways cancelled an initial order for 19 passenger planes worth about $3 billion from a local firm, raising the prospect it will go direct to manufacturers Boeing and Airbus.
Kuwait's Aviation Lease and Finance Company (Alafco), which rents out and sells aircraft, said state-owned Kuwait Airways cancelled the order because it failed to get government approval.
"The letter of intent signed with Kuwait Airways for the supply of 19 aircraft is considered cancelled," the leasing company said in a statement on the Kuwait bourse website.
The loss-making airline was ordering the new aircraft from a lessor rather than direct from the manufacturers because it wanted delivery between 2009 and 2014.
Alafco had already ordered the 787s and would have been able to deliver sooner than the manufacturers.
"Now Kuwait Airways can go straight to the manufacturing companies and order their aircraft from them without having to pay a 10 to 15 per cent premium," said Karim Murad, a transport analyst at Dubai-based Shuaa Capital.
The carrier, which operates a fleet of 17 mainly Airbus planes, will have to delay its fleet renewal programme or perhaps offer planemakers an incentive for the early delivery of some of the planes, Murad said.
Shares of Alafco, which surged 15pc during the four trading days before it announced the Kuwait Airways in June, plunged 7.2pc on Tuesday, their biggest one-day fall in almost 11 months.
Alafco said in June it had reached initial agreement with Kuwait Airways to sell it 19 Boeing 787s and Airbus A320 aircraft.
A Kuwait Airways official said at the time that the order for 12 787 "Dreamliners" and seven single-aisle A320s was worth about $3bn. The carrier also took options for seven more A320s.
Kuwait Airways lost most its fleet - 15 planes - during Iraq's 1990-1991 occupation of the Gulf oil producer, according to its website.
The carrier may spend as much as $6bn to replace and expand its current fleet, Chairman Talal Mubarak Al -Sabah said earlier.
An A320 costs about $136 million at list prices and a 787 between $146m and $200m, depending on the version, according to the websites of the two plane makers.
That would value the Kuwait Airways order at $952m for the Airbus aircraft and between $1.75bn and $2.4bn for the Boeing planes.
Kuwait Finance House, a bank that operates according to Islamic principles that ban the receipt of interest, controls Alafco. Its shares were unchanged yesterday.