The Saudi national carrier has reportedly received the green light from the government to transform its catering, cargo, ground handling, pilot training and technical service arms into five independent companies as part of the airline's efforts to speed up its privatisation process.
The statement, issued recently, explained that shares for the five new companies, that will have international strategic partners, will be floated for public subscription through IPOs.
Saudia is currently working on a marketing plan to woo businessmen and investors into investing in these ventures.
Khaled Al-Mulhim, the airline's new director general, has already announced plans to transform the organisation into a holding company and its strategic units into independent firms.
A committee that oversees the airline's privatisation process met recently under the chairmanship of Al-Mulhim and reviewed the progress of its work. It also studied a report by the financial adviser on restructuring the organisation.
"The meeting discussed the timeframe and proposals to speed up privatisation of units in preparation for the presentation of a final report on the project to the Supreme Economic Council," the statement said.
The committee agreed that the formation of independent companies for strategic units would boost growth and help face competition. It also emphasised the need for financial and administrative independence of these units.
The meeting also discussed prospects of improving performance of Saudia staff and accommodating excess workers. The airline intends to set out a programme for encouraging early retirement of its workers at their own will and choice. It is widely expected that the appointment of Al-Mulhim, who steered partial privatisation of the Saudi Telecom Company, will speed up the airline's privatisation process. The STC floated a 30-per cent stake in the company in 2003 when Al-Mulhim was the company's chief executive officer.
During his tenure at Saudi Telecom, the company restructured its operations into four distinct subsidiaries to become one of the largest telecommunications operators in the Middle East. Saudi Telecom's initial public offering was oversubscribed by 51 times. He increased Al Jawal, Saudi Telecom's mobile phone subsidiary, subscriber-base from about 98,000 five years ago to more than 12 million, when he left the company at the end of 2005. Al Mulhim, an engineering graduate from Indiana University, succeeded Khaled Abdullah Ben Bakr, who was relieved of his duties upon his request.
In a recent statement, Finance Minister Ibrahim Al Assaf said the Saudi Arabian Airlines was next in line for privatisation. He added that it would take place before the sale of the third mobile phone licence that was expected by the end of this year.
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