KUWAIT AIRWAYS CHAIRMAN SAYS DELIVERY TIMELINE

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 004555

SIPDIS

SIPDIS
SENSITIVE
NOFORN

STATE FOR EB/TRA, COMMERCE FOR ITA/USFCS/ADVOCACY
CENTER/CJAMES

E.O. 12958: DECL: 12/03/2011
TAGS: EAIR BEXP ECON KU
SUBJECT: KUWAIT AIRWAYS CHAIRMAN SAYS DELIVERY TIMELINE
CRUCIAL FOR FLEET REPLACEMENT DECISION


Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d).


1. (C/NF) On December 3, Ambassador met with Kuwait Airways
(KA) Chairman and Managing Director Shaykh Talal Mubarak
Al-Ahmed Al-Sabah to discuss KA's plans to replace its aging
fleet, TSA screening requirements, United Airlines, and KA's
problems with pilots on TSA's "no fly" list. Al-Sabah said
KA has been in contact with both Boeing and Airbus about new
fleet packages, and expects to hear from Boeing on December 5
about reserving production slots. Al-Sabah noted that the
timeline for delivery of new aircraft and the interim
bridging package would factor heavily in KA's decision,
saying that Boeing could benefit by being able to deliver new
aircraft sooner than Airbus. KA is working with the Ministry
of Interior (MOI) to improve baggage screening procedures,
particularly transit baggage, in accordance with TSA
requirements. Al-Sabah said the MOI plans to purchase more
x-ray machines, and that current flight delays due to
screening would be alleviated before the end of the year.

Delivery Timeline Crucial; Ambassador Urges Transparency
-------------- --------------


2. (C/NF) On December 3, Ambassador met with Kuwait Airways
(KA) Chairman and Managing Director Shaykh Talal Mubarak
Al-Ahmed Al-Sabah. Chairman Al-Sabah noted United Airlines's
successful first month of flights to and from Kuwait, saying
that its passenger load of approximately 60% was "very good"
for an airline entering a new market. Al-Sabah said KA plans
to purchase as many as 30 new aircraft as part of a plan to
replace aging planes and expand the airline's operations. He
said KA has been in contact with both Boeing and Airbus about
the project, noting that Boeing's advocacy effort had
"completely changed and become much more active" in the Gulf
since opening a regional office in Dubai. Al-Sabah's staff
said Boeing will submit on December 5 information regarding
reserving production slots. He stressed that the timeline
for delivery of the planes would be a key factor in KA's
decision, saying that both Airbus and Boeing expect delays
before planes would be made available. Noting that the
Airbus A350 would not be available before 2014, Al-Sabah said
Boeing "could benefit if it could deliver earlier." Al-Sabah
said the bridging package, in which the manufacturer would
supply planes in the interval between contract signing and
delivery, is an important consideration for KA along with
acquisition and operating costs.


3. (C/NF) Al-Sabah said KA would "wait until we see all the
figures" before making a decision, and indicated that what
Boeing presents on December 5 will be an important piece of
the puzzle. He said a request for bids may take place in
early 2007. The Ambassador urged transparency in the
process, saying that KA's decision should focus not only on
price but also on operating costs. The Ambassador also
stressed that KA should not base its procurement decision on
attempting to please both the U.S. and E.U. by focusing on
the origin of aircraft parts, such as the many U.S.
components in Airbus planes. The Ambassador said he would
like to see the sale of U.S.-origin aircraft, not just
aircraft parts. Al-Sabah acknowledged the Ambassador's
points and repeated that the decision would be based on the
delivery timeline, bridging plan, and cost.

KA and MOI Working to Bring Screening Up to TSA Standard
-------------- --------------


4. (C/NF) Al-Sabah said KA is in regular contact with
TSA-Paris and FAA-Athens to bring passenger and baggage

SIPDIS
screening into compliance with TSA requirements, and is in
discussions with the MOI about improving screening. He said
the requirement to re-screen transit baggage bound for the
U.S. has resulted in KA's departures to the U.S. being
delayed, but that MOI will purchase new x-ray machines and
that this will be resolved by the end of the year. Al-Sabah
acknowledged the pressure on KA to improve its screening
processes, and the Ambassador urged him to push the
organization on meeting TSA requirements.

Pilots on the "No Fly" List
--------------


5. (C/NF) Al-Sabah related that six KA pilots are currently
on the TSA "no fly" list. He said their inclusion on the

KUWAIT 00004555 002 OF 002


list causes problems because some of these pilots fly the 747
and would normally be flying to the U.S., including one with
the Amiri Fleet. Al-Sabah asked the Ambassador for
assistance in determining if these pilots could be removed
from the "no fly" list. Ambassador agreed to look into the
matter with appropriate USG agencies.

********************************************* *
For more reporting from Embassy Kuwait, visit:
http://www.state.sgov.gov/p/nea/kuwait/?cable s
Visit Kuwait's Classified Website:
http://www.state.sgov.gov/p/nea/kuwait/
********************************************* *
LEBARON