MIDDLE EAST Supplement~ Saudi Air set to look East

While most of its contemporaries are focusing on existing network expansion and moving into new markets, Saudi Arabian Airlines is taking an addition big step by privatizing itscargo division. Earlier this year in April, the Saudi national carrier invited potential investors to submit proposals to acquire up to a 49 per cent share in the […]


While most of its contemporaries are focusing on existing network expansion and moving into new markets, Saudi Arabian Airlines is taking an addition big step by privatizing itscargo division.

Earlier this year in April, the Saudi national carrier invited potential investors to submit proposals to acquire up to a 49 per cent share in the cargo unit, according to Saud A. Arab, general manager of cargo andairmail for Saudi’s cargo arm.

The privatization, approved by the Saudi government could be completed as early as year-end. The process will transform the airline into a holding company with different operating subsidiaries, each of which can havedifferent minority investors.

This will ultimately be followed by a stock exchange listing via an initial public offering (IPO), although Arab noted this was still some time away.“The privatisation will contributesignifi cantly to the effi ciency, profi tabilityand growth of the cargo unit,”Arab said, adding that the air cargomarket had become extremely competitive.

“There is very tough competition because not only are there many new comers to the air cargo market – especially the Asian market – but open skies developments is also freeing up the industry for newly established competition.”

While he acknowledges there is some degree of over-capacity, particularly in the China market, he said carriers are adding capacity becausethere is demand.