Prince Sultan signals aviation shake-up

28 June 2002

Second Deputy Prime Minister and Defence & Aviation Minister Prince Sultan has welcomed the introduction of private airlines, ahead of the planned privatisation of Saudi Arabian Airlines. 'We are ready to accept such aviation companies established by businessmen within the kingdom,' he said on 26 June. The announcement follows the approval of a new board for the national carrier (see box).

The government is preparing for the wholesale restructuring of the Saudi civil aviation sector on the basis of a series of reports submitted by BNP Paribassince November last year. Key issues now under consideration include changes to the capital and management structures of Saudi Arabian, the restructuring of fleet operations and changes to logistical operations such as flight routes and fuel supply. As a first step, the airline is considering the replacement of some of the older aircraft in its fleet, industry sources say.

Plans to privatise Saudi Arabian Airlines were first floated in 1999. 'It has been an extensive diagnostic exercise,' says an official at Clifford Chance, which is acting as legal advisor to the airline in partnership with the local Law Firm of Yousef & Mohammed al-Jadaan. 'The first part of the study involves the standard questions of asset liability, legal and operational aspects and so on. This was completed some time ago. The second part involves the consideration of strategic options for the airline. Those reports have been fully tabled and we are now in a period of consideration - a breathing space - before any decisions are made.'

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