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