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Saudi Arabian Airlines sets privatisation strategy

Saudi Arabia: Sunday, July 20 - 2008 @ 12:18

Airbus announced that a “firm order” had been announced for eight A330-300 twin-aisle aircraft.

The A330-300 can carry 300 passengers on distance up to 10,500 kilometres.

According to the airline’s director-general, Engineer Khalid al Molhem, the purchase is designed ‘to meet rising passenger demand and expectations.’

The latest order follows a purchase of 30 A320 single-aisle aircraft from Airbus last December.

This procurement followed on from an earlier 2007 order for 22 A320s valued at $1.7bn. No figure has been revealed for the latest purchases.

Interim aircraft leases

As an interim measure, while it awaits delivery of its purchased A320s, the Saudi carrier has signed agreements with General Electric and Gulf One Investment Bank for the lease of ten A320s from each firm respectively.

The first is scheduled to arrive from Gulf One in April 2009 and from the GE in November next year.

Last year Saudi Arabian received the first of 15 E-170 passenger airliners from a $400m order placed with Brazil’s Embraer aircraft manufacturer.

The aircraft have been bought for operation on lower-density domestic routes including Riyadh-Najran and Riyadh-Buraidah, the carrier says.

A strategic plan is meanwhile being implemented to upgrade the airline’s technology base.

Sabre Airline Solutions signed a contract in January to work on the Saudi carrier’s network management and operations systems as well as ground handling and its air freight business.

Sabre provides similar services to British Airways, Air France, American Airlines, Singapore Airlines and other carriers, providing financial improvements to fares and schedules management and other operational aspects of their businesses.

Saudi airlines privatisation strategy

Saudi Arabia Airlines privatisation strategy is to be a staged process.

In January, Al Molhem announced that the state-owned airline’s aviation services could be privatised within two years. The process for other units of the business has already started.

Last September, 49% of the shares in the airline’s catering division were sold to Strategic Catering Company, made up of Abdul Mohsen Al-Hokair Tourism and Development Company, Fowzan Holding and the Toulouse-based Newrest Group Holding.

The carrier’s catering business supplies not only its own needs but also those of 48 other airlines, preparing an average 25,000 ,meals a day and up to 100,000 at peak times.

In its last published report in 2005 the catering division recorded a net profit of $37.8m on revenues of $171m.

Shares in the five other units, comprising maintenance, cargo, ground services, and the Prince Sultan Aviation Academy will be sold.

Cargo operations are the next candidate for privatisation followed by ground services and then maintenance. The flying operation will be the final sale.

See also:
Middle East spends big at Farnborough airshow
Low cost carriers takeoff in Gulf
Listen: FlyDubai CEO on Farnborough aircraft orders

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Sunday, July 20- 2008 @ 12:18 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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