Saudia to Sell Off Stake in Catering Division

RIYADH- In a major boost to the Kingdom’s privatization plan, Saudi Arabian Airlines yesterday kicked off the long-awaited bidding process for a stake of up to 49 percent of its catering division.

The catering division is one of Saudi’s five sectors that the company plans to privatize by the end of 2007 before floating a stake in its core transport business.

“Saudi Catering is a profitable venture, which produced some 15 million meals in the first nine months of 2005 alone to cater for a large number of airlines operating to and from the Kingdom, a senior Saudia official said here yesterday.

“The catering division has had a great impact on the local market since it purchased 80 percent of its material from the Saudi market. ” added the official.

Compared to the year before, Saudia’s catering division witnessed a 12 percent increase in production. The official said the growth has been evenly recorded in all of the catering division’s four local units Jeddah, Riyadh, Madinah and Dammam) and its inter-national unit in Cairo.

He added that the airline produces meals for 75,000 flights, including 11, 000 flights for international carriers. In 2005, Saudia Catering received the HACEP International Award given by Societe  Generale de Surveillance in recognition of the airline’s high food safety standards.

Referring to the privatization process, the official said that Saudi Arabian Airlines is one of the three largest airlines in the Middle East. Saudi is presently looking to sell between 30 and 49 percent of the catering unit and has set a Sept. 27 deadline for bids.

“It is expected that the catering business will undergo restructuring to become the New Catering Company, a new firm under the helm of Saudi Arabian Airlines, ” Saudi Arabian Airlines said in a statement issued yesterday.

“Bidders will also get a role in the new company’s management and should bring some expertise in the catering business, ” the statement said.

Launched in 1981, the catering business together with its on board duty-free sales generated a turnover of $171.5 million, and a net profit of $37.8 million with a net operating margin of 25 percent in 2005.

The airline, which carried 16 million passengers last year, also hopes to privatize its baggage handling, cargo, pilot training and technical and maintenance units. Some of these would be done through public listings. Saudi authorities have licensed two private airlines so far.