I don't currently know the status of the Kuwaiti law that prohibits Kuwaiti persons and companies from any and all commercial relations with Israelis and Israeli companies; but last year too it was still enforceable and being enforced, and I don't recall coming across anything suggesting that Kuwait repealed Kuwait's 1964 Law # 21.

The Kuwaiti government itself is sovereign and is not really subject to the those laws if it doesn't want to be; so if (a) the Kuwaiti government wanted LY or other Israeli flights to fly over Kuwait and (b) Israel was comfortable with LY or other Israeli passengers flights routinely going over that area -- something I consider highly unlikely at this point -- then LY and other Israeli passenger flights literally freely overflying could happen regardless of that Kuwaiti law.