(MENAFN- The Arabian Post)

A shareholder meeting of Kuwait Airways authorised an accounting manoeuvre to eliminate 300 million dinars in accumulated losses by reducing its paid-up capital, the official gazette confirmed.

The extraordinary general assembly, convened on 2 September, approved a cut in paid-up capital from 977.7 million dinars to 683.7 million dinars, and a 6 million dinar diminution of its legal reserve. Simultaneously, issued capital will be increased by 300 million dinars under a scheduled payment plan overseen by the Kuwait Investment Authority. After completion of these measures, the carrier's issued capital will total 983.66 million dinars.

The restructuring move is a bid to clean up the airline's balance sheet and lay groundwork for future recovery. Kuwait Airways has struggled with deep losses infused over several years, and this accounting reset is a critical step in restoring financial flexibility.

Despite earlier public statements of a plan to break even in 2025, the airline has yet to publish financial results for 2023 and 2024, drawing scrutiny over transparency. The absence of those figures continues to provoke speculation about the depth of its financial stress.

The airline's troubles extend beyond accounting. Chairman Abdulmohsen Alfagaan has flagged serious operational challenges, including delays in aircraft deliveries and regional geopolitical tensions hampering network expansion. The carrier currently operates a fleet of 27 jets, falling short of its earlier target of 33; Alfagaan now projects reaching 30 by year-end, with the remaining units arriving only by 2027.

At a briefing earlier this year, Alfagaan warned that the 2025 break-even target could be imperilled, citing supply chain disruptions and uncertainties in certain destination markets.

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Meanwhile, internal turbulence has unsettled management ranks. In May, the airline dismissed its CEO, Ahmad al-Kreebani, following criticisms by the national civil aviation authority over persistent failures to comply with safety regulations and deadlines. His replacement, Abdulwahab Al-Shatti, assumed the role shortly thereafter.

Kuwait Airways' restructuring contrasts with the trajectory of many Gulf carriers, which have rebounded strongly from the pandemic slump and are playing pivotal roles in regional tourism and economic diversification. But unlike more aggressive network expansion and fleet investment strategies seen elsewhere, Kuwait's flag carrier is treading carefully.

In August, the airline disclosed that Airbus has yet to deliver nine aircraft orders, compounding its capacity constraints. It also revealed that, at one point, the fleet count had dropped to 23 due to returned leased units.

Growth targets also appear under strain. The carrier had aimed to boost passenger loads from more than 4 million in the previous year to 5.5 million in 2025. With fleet shortfalls and geopolitical risk affecting route planning, that ambition may need recalibration.

Kuwait Airways' financial trajectory has seen periodic improvement attempts. In 2022, management reported a halving of losses relative to 2019 levels - declining from 107 million dinars to about 55 million.

Yet critics argue that systemic reforms remain necessary: fleet modernisation, route rationalisation, governance upgrades and greater disclosure norms could be vital to restoring investor and stakeholder confidence. The capital reduction and loss write-off will relieve immediate accounting constraints, but the airline's longer-term viability hinges on execution amid a highly competitive Gulf aviation ecosystem.

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