Saudi Arabia to include low-cost Flyadeal in privatization plan

The privatization of Saudia is expected to be completed by 2020, with an IPO of the main airline and its budget carrier unit the most likely option. (Shutterstock)
Updated 23 September 2017
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Saudi Arabia to include low-cost Flyadeal in privatization plan

NEW YORK: Saudi Arabian Airlines, (Saudia) the Kingdom’s flag-carrier, is planning to privatize the main airline and the low-cost carrier Flyadeal in a single transaction, according to company plans seen by Arab News.
Most of the rest of the Saudia aviation business — cargo, maintenance, training, medical and real estate — will be privatized in a series of trade sales and public share offerings.
The whole process is aimed to be completed by 2020, with an initial public offering of a combined entity Saudia and Flyadeal the most likely option.
The Saudi Royal Fleet will not be part of the privatise plan, according to the plans.
It is believed the process of “corporatization” — removal from public ownership and establishment as a limited liability company — has already begun. The plans show a new entity, Saudi Arabian Airlines Corporation (SAAC), which could be corporatised into a holding company this year.
A Saudia spokesperson said: “One significant part of the group’s privatization plan is to incorporate SAAC to become the group’s parent company. There are no explicit decisions for this yet, but the estimated timeline is by 2020.”
The privatization of Saudia will be a significant event in the Kingdom’s National Transformation Program. Although not as valuable in monetary terms as other parts of the national portfolio — like energy and infrastructure assets — offering shares in the national airline will be regarded as a test of the Saudi public’s appetite for privatization sales.
Saudia was identified as one of the “jewels in the crown of the privatization process launched by the National Center for Privatization, the body charged with co-ordinating the Kingdom’s $200bn sell-off by the Council for Economic and Development Affairs.
The inclusion of Flyadeal in the sell-off plan is also significant. The new airline — launched as part of a liberalization of the Saudi aviation industry — has only just been awarded its air operators certificate and taken delivery of its first planes.
Flyadeal’s first route — between Riyadh and Jeddah — started on Saturday.
The spokesperson added: “The group privatization strategy covers all strategic business units excluding the Royal Fleet. The plan is to privatise Saudia and Flyadeal together under the group parent company.
Privatization is already underway in some Saudia subsidiaries. “Non-core” entities like catering and ground services are already publicly traded, while others such as real estate and the Prince Sultan Aviation Academy are “under transformation, preparing for privatization,” according to the plans.
Advisers are believed to have been engaged, but Saudia declined to identify them. “The privatization for each business unit involves the use of various external advisers — legal, financial, and strategic — in collaboration with the respective boards and the owners,” the spokesperson said.
The privatization process is expected to change the management structure and business culture at Saudia in a number of ways, formally breaking up a single corporate entity into multiple companies.
Its corporate structure will move from “divisional management to a client vendor relationship,” and from a “single marketing model to an alliance marketing model.”
There will also be an impact on Saudia’s information technology capability.
The main Saudia airline — founded in 1945 — has a fleet of 141 aircraft and recently launched its 87th destination with a route to Mauritius. Earlier this year it was named the “most improved airline” at the Skytrax world airline awards.
A new top executive team of director general Saleh bin Nasser Al-Jasser and CEO Jaan Albrecht has been in place since last year.


US intelligence says Huawei funded by Chinese state security: report

Updated 20 April 2019
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US intelligence says Huawei funded by Chinese state security: report

  • The accusation comes at a time of trade tensions between Washington and Beijing
  • Huawei dismissed the allegations

US intelligence has accused Huawei Technologies of being funded by Chinese state security, The Times said on Saturday, adding to the list of allegations faced by the Chinese technology company in the West.
The CIA accused Huawei of receiving funding from China’s National Security Commission, the People’s Liberation Army and a third branch of the Chinese state intelligence network, the British newspaper reported, citing a source.
Earlier this year, US intelligence shared its claims with other members of the Five Eyes intelligence-sharing group, which includes Britain, Australia, Canada and New Zealand, according to the report.
Huawei dismissed the allegations in a statement cited by the newspaper.
“Huawei does not comment on unsubstantiated allegations backed up by zero evidence from anonymous sources,” a Huawei representative told The Times.
The company, the CIA and Chinese state security agencies did not respond immediately to requests for comment.
The accusation comes at a time of trade tensions between Washington and Beijing and amid concerns in the United States that Huawei’s equipment could be used for espionage. The company has said the concerns are unfounded.
Authorities in the United States are probing Huawei for alleged sanctions violations.
Meng Wanzhou, Huawei’s chief financial officer and daughter of its founder, Ren Zhengfei, was arrested in Canada in December at the request of the United States on charges of bank and wire fraud in violation of US sanctions against Iran.
She denies wrongdoing and her father has previously said the arrest was “politically motivated.”
Amid such charges, top educational institutions in the West have recently severed ties with Huawei to avoid losing federal funding.
Another Chinese technology company, ZTE Corp. , has also been at the center of similar controversies in the United States.
US sanctions forced ZTE to stop most business between April and July last year after Commerce Department officials said it broke a pact and was caught illegally shipping US-origin goods to Iran and North Korea. The sanctions were lifted after ZTE paid $1.4 billion in penalties.
Reuters reported earlier this week that the United States will push its allies at a meeting in Prague next month to adopt shared security and policy measures that will make it more difficult for Huawei to dominate 5G telecommunications networks.