RIYADH: The Shoura Council recommended Sunday an initial public offering for the Kingdom’s flag carrier Saudi Arabian Airlines instead of selling off its units piecemeal in a privatization effort.
The council’s transport and telecommunications committee made its recommendation in response to an annual report by the state-controlled firm, also known as Saudia, said Abdulaziz Al-Tuwaijri, a Shoura member who heads the committee.
“The committee includes experts in the field ... It (committee) added a proposal by one Shoura member, Saud Al-Shammari, who advised that Saudia should remain under the state’s control,” Tuwaijri said.
“So the committee’s recommendation was that the state owns the firm and a stake of its capital is sold to the public instead of selling its units to private firms,” he added. The committee’s proposals were approved by the majority of the council’s members, Tuwaijri said.
Shoura Council members are appointed by Custodian of the Two Holy Mosques King Abdullah. Although its decisions are not binding, it has become a forum for debate, encouraged by King Abdullah’s calls for reform.
In 2006, Saudia launched a gradual privatization of its catering, cargo, maintenance, ground services and aviation services units to pave the way for a flotation of a stake in its core transport unit.
It has already sold to private investors a 49 percent stake in its catering unit and 30 percent of its cargo unit.
The council also recommended that Saudia diversify its aircraft fleet to better serve domestic destinations, where the firm competes with private low-cost carriers.
“The committee noticed that the company’s reports point to the high cost of operating long-haul aircraft to serve domestic destinations. It suggested the purchase of short- and medium-haul aircraft so that reflects on the ticket price,” Tuwaijri said.
The Council approved the recommendations of the committee that included adding aircraft to the Saudia fleet so it could serve the people in the Kingdom’s sparsely populated regions.
Last year the carrier signed orders for eight Airbus A330s aircraft and 12 Boeing 787s after it ordered 22 Airbus A320s in 2007.