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Saudia to purchase 50 aircraft; IPO for cargo unit this year

Saudi Arabian Airlines (Saudia) intends to purchase 50 new aircraft to beef up its domestic and international fleet network and is in talks with manufacturers Boeing and Airbus.

According to top Saudia executive “We will have to decide on purchasing the new aircraft before the end of the year,” said Abdul Rahman Altayeb, vice president for maintenance at the national flag carrier.

He said it would be a mix of wide-body and narrow-body planes, adding that the airline was looking at Boeing’s new wide-body 777X aircraft as well as the Airbus A380 superjumbo.

Speaking about narrow-body planes, Altayeb said both the Airbus A320neo and the Boeing 737 MAX are being considered.

Altayeb confirmed plans to conduct an initial public offering for Saudi Airlines Cargo Company, a subsidiary of Saudia, this year and an IPO for its maintenance company, Saudia Aerospace Engineering Industries in 2015.

The cargo unit would be the second of six strategic units after catering to pursue a stock market listing.

“The Cargo IPO will be organized sometime this year after receiving approval from the Capital Market Authority,” Altayeb said, adding that there is a big demand for the company’s IPO.

The IPO of the catering company raised $347 million with an IPO of 30 percent of its shares in 2012. Its shares rose 81.4 percent last year, agencies said.

Altayeb said the IPO of the maintenance company SAEI cannot be expected before June 2015. “We will look to sell about 30 percent of this unit.”

Saudi Arabia’s stock market witnessed five new listings in 2013 with a combined value of 1.96 billion riyals ($523 million). Saudi Arabia had 163 listed companies as of end-2013.

The country opened its domestic aviation market to competition in 2012 as part of reforms aimed at improving service levels and accessibility. Qatar Airways is expected to launch domestic operations in Saudi Arabia this year.

Saudia, which competes with regional aviation giants such as Emirates and Etihad Airways, has been looking to expand its global reach.

Saudi

Khaled Al-Molhem, director general of Saudia, signed a memorandum of understanding with Boeing Company during a visit to the American aircraft manufacturer’s headquarters in St. Louis.

“The agreement was aimed at promoting coordination and joint work between the two companies,” an official statement said.

The accord also aims at providing integrated systems to develop local capabilities in commercial aviation and expand their business activities.

Al-Molhem expressed his hope the agreement would benefit both Saudia and Boeing. “It reflects the strong relations between the two companies.”

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