[0-_-0]

Linus says:

"If the GNU kernel had been ready last spring, I'd not have bothered to even start my project: the fact is that it wasn't and still isn't. Linux wins heavily on points of being available now."

Is he referring to GNU Hurd that is still unfinished?

[bombcar]

Correct - the general assumption at the time is that GNU Hurd was about to bust out and become the main free software kernel. Remember that computers that COULD run practical Unix for home use had just become relatively available - and Linus wanted to play with his new 386 and the fun instructions provided therein.