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Saudi Airlines continues privatization program - ASHARQ AL-AWSAT English Archive
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File photo of a Saudi airliner. (Source: Ibrahim Abu Zaied)

File photo of a Saudi airliner. (Ibrahim Abu Zaied)

Jeddah, Asharq Al-Awsat—State-owned carrier Saudi Airlines has signed an agreement to privatize the Saudi Aerospace Engineering Industries company. The agreement will involve the sale of 30 percent of the carrier’s aircraft maintenance company to Tarabut Aircraft Maintenance Company, which is owned by the Integrated Transport Company.

The deal is part of a larger privatization program underway at Saudi Airlines, also known as Saudia. The engineering and aviation industry is the fourth sector to be privatized, following the privatization of the logistics, cargo and ground services sectors.

The agreement was signed during a meeting of the board of directors of Saudi Airlines, chaired by Prince Fahd Bin Abdullah. The meeting was attended by Prince Sultan Bin Mohamed Bin Saud Al-Kabir, chairman of the board of directors of the Integrated Transport Company and Khalid Bin Abdullah, director-general of Saudi Airlines.

Prince Fahd, who is also the chairman of the board of directors of the General Authority of Civil Aviation (GACA), chaired a meeting on Tuesday in which he said the authority was going ahead with plans to develop the aviation industry in the country. He said there were also plans to improve the services provided at the airports to a level which meets the aspirations of the leadership.

He added that the airline industry was experiencing rapid development due to increasing demand for air travel. He also added that plans were in place to increase passenger capacity at the kingdom’s airports and improve services.

The meeting also discussed the aims of the GACA’s strategy for the next 10 years and the restructuring of the GACA’s IT sector to convert it to a private company. Informed sources expect the company to be floated on completion of relevant procedures, as this is the first stage in the privatization of Saudia’s maintenance sector.

Aviation industry expert Mohsen Najjar told Asharq Al-Awsat that current conditions in the industry gave an incentive to airlines to set up separate maintenance companies, to try to attract customers from other airlines to offer maintenance services, and to attract capital and technical skills to compete with other companies that provide maintenance services.

Najjar pointed out that Saudia was a large company with substantial assets in the field of aircraft maintenance. Therefore, this step will enable the private sector to participate in the company’s new projects and make a shift in the maintenance of Saudi Airlines’ aircraft and the aircraft of other airlines, which will be targeted by the maintenance company.

The director-general of Saudi Airlines, Khalid Melhem, gave a visual presentation of the airline’s operational performance, which showed a record increase in passengers compared to previous years. Saudi Airlines carried 23 million passengers in 2012, representing an increase of 2.4 million passengers on 2011 and an increase of more than 6 million on 2008.

Meanwhile, the airline carried 8 million passengers on international flights in 2012, an increase of 748,000 passengers on 2011. Domestic flights accounted for more than 13 million passengers.

The airline carried more than 11 million passengers in the first half of 2013, an increase of around 678,000 passengers on the same period of 2012. The daily passenger numbers during peak seasons reached around 70,000 passengers, with an increase in daily flights during peak seasons to more than 560 flights.

Melhem said the airline has worked at expanding its domestic and international routes with planned new flights to Toronto in the winter of 2013 and Los Angeles in March 2014. He said the airline also planned an increase in seat capacity and in domestic and international flights.

Melhem said the airline received 65 new aircraft out of 90 aircraft on order from Airbus and Boeing as part of its efforts to modernize its fleet. He added that the airline was making plans to meet the increase in demand in domestic flights, which is expected to reach 28 million passengers by 2020, with Saudi Airlines’ share of that total reaching 22 million passengers.