Debt-ridden state carrier Kuwait Airways posted operating earnings of 3 million dinars (USD$10.3 million) for the six months to September 30, its chairman Sheikh Talal Mubarak al-Sabah said.

"The corporation would have achieved operating profits of up to 12.2 million dinars in the first six months if it wasn't for the rise in fuel expenses" said Sheikh Talal.

No comparative figures were given for year-ago earnings.

He also told state news agency KUNA total revenues rose to 128.8 million dinars in the first half of the fiscal year, which ends in March 2006, from 113.4 million dinars a year ago.

He attributed the increase to a rise in passenger revenues, rising profitability of subsidiaries and lower interest payments on loans.

Sheikh Talal said expenses rose 9.4 percent year-on-year to 152.6 million dinars, partly due to higher fuel costs.

Kuwait Airways is heavily in debt as it is still paying for a new fleet, purchased after the 1991 Gulf War, which includes 15 Airbus and two Boeing 777s. The carrier lost nearly 85 percent of its assets during the seven-month Iraqi occupation that was ended by US-led forces.

The last year Kuwait Airways made money was fiscal 2000, when it logged a USD$77 million profit -- partly from compensation for Gulf War losses.