Plan to Salvage the Kuwaiti
Kuwait Airways has historically suffered from administrative instability for more than half a century, resulting in public losses amounting to tens of billions of dollars. The causes are well known, as most are political. There has been a succession of boards of directors, some of which were unqualified or lacked the necessary authority. Moreover, the company may have been forced to hire anyone available, with a complete absence of governance across all its activities. To the best of my knowledge, Kuwait Airways continues to operate without any written, mutually agreed-upon performance standards between the board and management, and in the absence of accountability. The board’s continued interference in operational decisions, without deep technical understanding, has led to repeated friction between the two parties. The Civil Aviation Authority, under its ineffective management, also played a role in obstructing the operations of Kuwait Airways in some instances. We must not forget the interventions of some Members of Parliament, which sometimes forced the company to comply with their demands.
The classic structural imbalance between the board of directors and executive management must be resolved at the first meeting of the new board, which consists of five Kuwaiti nationals and three expatriates. Each of the three expatriates will wear two hats: one as a board member and the other as a member of the executive management. Consequently, the board must be capable of resolving this unprecedented situation by deciding on the following matters:
1. Strategic Mandate: Clearly defining the company’s primary objective (purely profit-driven, public service-oriented, or a specific mix of both), as this will determine the fate of every subsequent decision, whether related to pricing, hiring, investment, or even the performance evaluation criteria for executives.
2. Oversight and Accountability: Establishing clear key performance indicators (KPIs), reviewing them periodically, and holding executive management accountable for them.
3. Approval of Fundamental Decisions: Such as major budgets, restructuring, and core human resources policies.
4. Protecting the Independence of Executive Management: Shielding it from daily political interference, while ensuring alignment with the general direction of the state as the owner.
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The situation of Kuwait Airways, and the obstacles and problems it has suffered from and continues to face, were not hidden from those who accepted roles as executive management. They will likely hold the upper hand in most decisions and will not act as a mere “rubber stamp,” as was often the case with previous executive teams. In fact, the situation—especially at the beginning—may need to be the exact opposite, whereby the expatriate executive management effectively holds the real strategic decision-making power, even though the board bears the formal legal responsibility before the owner. This is dictated by the circumstances, in my view. I also believe that any obstruction from any party will lead the three-member executive team to submit a collective resignation, particularly since their expertise is in demand, and they will not remain unemployed for long.
Therefore, the owner entity must clarify all these matters to the new board of directors. There is also a necessity for a clear performance contract with the expatriate executive management, linking their tenure and compensation to pre-agreed, specific indicators, rather than leaving the matter open to later interpretations. Otherwise, we will have neither our present nor a promising future.
Ahmed Al-Sarraf
