The Kuwaiti government has delayed plans to privatise Kuwait Airways Corp. (KAC) and decided instead to restructure the loss-making flag carrier, a government committee said in a statement on Sunday.

The privatisation committee said it has reviewed bids from international and local companies to purchase the 35 per cent of the airline on offer but then recommended it will be best to restructure the company first.

"The Council of Ministers has approved the recommendation and decided accordingly... to provide the legal framework for the restructuring and reformation of KAC prior to its privatisation," the committee said.

Committee chief Motlaq al-Sane said the delay in privatising KAC "gives us the opportunity to address a number of operational and structural issues ahead of a future privatisation programme."

The privatisation committee was formed to transform the state-owned KAC into a private company and to transfer assets, liabilities, rights and benefits from the airline in accordance with a law passed in January 2008.

International firms have valued the assets of Kuwait Airways at 220 million dinars (US$800 million).

The airline's privatisation law stipulates the sale of 35 per cent of the private company to a strategic investor and 40 per cent to be sold to Kuwaiti citizens in an initial public offering.

Five percent will be granted to Kuwaiti employees while the remaining 20 per cent will be held by Kuwait Investment Authority, the OPEC member sovereign wealth fund.

Kuwait Airways has posted a loss in all but one of the past 21 years, accumulating losses of more than $2.7 billion.

The airline has an ageing fleet of 15 Airbus and two Boeing aircraft.