(MENAFN - AFP) Kuwait Airways Co. has signed a Memorandum of Understanding (MoU) with Airbus to buy 25 planes with an option for 10 more and to lease 12 planes, its acting chairman said on Tuesday.
"We have signed a Memorandum of Understanding with Airbus to purchase 25 planes to replace the existing ageing fleet," Jassar al-Jassar told a press conference.
He declined to reveal the value of the deal citing a confidentiality clause but local media, when talks of the deal first surfaced in May, estimated the cost at around 3 billion.
State-owned KAC, which is undergoing privatisation, signed a letter of acceptance for the deal in May.
He said the airline has obtained all the necessary authorisations from the government.
Financial consultant for the deal Amani Buresli, a former minister of commerce, said the agreement includes the purchase of 15 A320neo and 10 A350-900 planes with the option to buy 10 more, five from each category.
She said delivery of the purchased planes would start in 2019 and the last planes would be delivered in 2020.
In the meantime, KAC will lease 12 planes, seven A320 and five A330-200, from the European manufacturer.
The final contract for the deal, the first plane order by KAC in more than 20 years, will be signed after a month, she said.
Part of the financing will be done through a syndicated loan by international and local banks and for the other part KAC will issue bonds or Islamic Sukuk, she said.
In addition to modernising its fleet, the loss-making KAC wants to make the airline profitable before offering a local or foreign investor a 40 percent stake.
Kuwait Airways has posted losses in all but one of the past 21 years, amounting to a total of more than 2.7 billion, which has been covered by the government.