Saudi Arabian Airlines to privatise core aviation unit

22 March 2010

Carrier signs deals to finance fleet expansion and to float shares in Saudi Arabian Airlines Catering Company

State-owned Saudi Arabian Airlines has signed agreements to privatise its core aviation unit and form a new company for ground services, which will serve all of the kingdom’s airports.

The airline signed five agreements in the kingdom on 22 March. They form part of a wider plan to privatise key sectors and improving services to increase the number of tourists and pilgrims that visit Saudi Arabia for Hajj and Umrah each year, according to a report by the local Arab News. The airline plans to make the kingdom the main centre for commercial aircraft maintenance in the Middle East.

The first agreement covers the merger of Saudi Airlines Ground Services Company with the local National Handling Services Company and Attar Ground Services Company to form one firm to provide ground services at all of the kingdom’s airports.

Khalid al-Molhem, director general of the airline, signed a second agreement with local Samba Financial Group and France’s BNP Paribas, which will finance the airline’s new fleet of aircraft. The new fleet includes 58 Airbus aircraft and 12 Boeing 787 aircraft to be delivered over the next three years. The airline has already received nine Airbus 320 aircraft.

The third deal was signed with local Al-Ahli Capital and US-based Morgan Stanley to privatise the core aviation unit of the company, while the fourth agreement was signed with Calyon Saudi Fransi to float part of Saudi Arabian Airlines Catering Company’s shares for public subscription.

The last deal aims at developing aircraft maintenance facilities at King Abdulaziz airport in Jeddah.

The General Authority of Civil Aviation is currently overseeing almost $4bn worth of airport projects that are planned or under way in the kingdom, including the $1.3bn expansion of Medina airport, the $4.8bn expansion of Jeddah airport and the development of 16 domestic airports at a cost of $667m.

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