JEDDAH, 31 July 2006 — Saudi Arabian Airlines has reportedly received the green light from the government to transform its catering, cargo, ground handling, pilot training and technical service sectors into five independent companies as part of the airline’s efforts to speed up its privatization process.

According to an official statement, shares for the five new companies, that will have international strategic partners, will be floated for public subscription through initial public offerings (IPOs).

Saudia is currently working on a marketing plan to woo businessmen and investors into putting their money into these ventures.

Khaled Al-Mulhim, the airline’s new director general, has already announced plans to transform the organization into a holding company and its strategic units into independent firms.

A committee that oversees the airline’s privatization process met recently under the chairmanship of Mulhim and reviewed the progress of its work. It also studied a report by the financial adviser on restructuring the organization.

“The meeting discussed the timeframe and proposals to speed up privatization of units in preparation of the presentation of a final report on the project to the Supreme Economic Council,” the statement said.

The committee agreed that the formation of independent companies for strategic units would boost growth and help face competition. It also emphasized the need for financial and administrative independence of these units.

The meeting also discussed prospects of improving performance of Saudia staff and accommodating excess workers. The airline intends to set out a program for encouraging early retirement of its workers at their own will and choice.

It was widely expected that the appointment of Mulhim, who steered partial privatization of Saudi Telecom Company, would speed up the airline’s privatization process. The STC floated a 30-percent stake in the company in 2003 when Mulhim was the company’s chief executive officer. In a recent statement, Finance Minister Ibrahim Al-Assaf said Saudi Arabian Airlines is next in line for privatization, adding that it would take place before the sale of the third mobile phone license that was expected by the end of this year.

Recent press reports said Saudia would sell 30 percent of its shares in an IPO this year. “Saudia has a total of 1.5 billion shares with a nominal value of SR10 each and will float 450 million shares for public subscription,” Al-Jazirah reported in April quoting a high-level source.

The move comes after the Supreme Economic Council (SEC), chaired by Custodian of the Two Holy Mosques King Abdullah, approved the airline’s executive privatization plan on March 21, 2006. Crown Prince Sultan, deputy premier and minister of defense and aviation and chairman of Saudia, signed a contract on Oct. 8, 2000 to conduct studies on the company’s privatization process.

Saudia has selected BNP Paribas of France as financial adviser for its privatization process. Its capital reached SR500 million in 2005 after it was SR440 million the year before.