JEDDAH, 24 January 2008 — Khaled Almulhim, director general of Saudi Arabian Airlines, announced yesterday that the aviation sector of the airline could be privatized within two years.
“We have already started privatization of the airline with the catering sector,” the Saudia chief said, adding that the airline would sell 30 to 40 percent of its shares in its strategic units.
Last September, Strategic Catering Company Ltd. (SCC), which represents a consortium of three companies, won 49 percent of Saudia Catering, one of the divisions of Saudi Arabian Airlines.
Crown Prince Sultan, who is chairman of Saudi Arabian Airlines, signed an agreement on Sept. 23, 2007 with a consortium comprising Abdul Mohsen Al-Hokair Tourism and Development Co., Fowzan Holding and Newrest Group Holding to sell 49 percent of Saudia Catering. The sale came after the Cabinet gave the national carrier the green light to convert its strategic units into separate companies in preparation to privatize the airline, the largest in the Middle East with a fleet of 120 passenger and cargo planes.
“On the basis of the Cabinet decision, we’ll establish six companies for catering, maintenance, cargo, ground service, aviation service, and Prince Sultan Aviation Academy,” Almulhim said.
Saudia offered to privatize its catering division in August last year and received tremendous response from investors. Saudia Catering recorded SR643 million ($171 million) revenue and SR142 million ($37.8 million) net profit in 2005.
Saudia Catering currently supplies 25,000 meals daily to 48 airline companies. The supply will reach 100,000 meals in peak seasons, Almulhim said. It has won several international awards.
“The next strategic unit slated for privatization is cargo,” the Saudia chief said. It will be followed by privatization of the ground service unit and maintenance unit.
“The civil aviation service, which is the core activity of the airline, will be the last to be privatized,” he added.
He said the participation of strategic partners in the new companies would strengthen the airline, adding that the selling process would be carried out in a transparent manner. The companies will sell part of their capital in light of market share and assets, ensuring good prices for the airline.
“Investors in each company should have the necessary qualification and experience,” he said, adding that offers made by investors would be opened in the presence of their representatives. “The top three bidders will be given another chance to review their bids and make final offers,” he added.