Dubai

Saudi Arabian Airlines plans to raise around 10 billion riyals (Dh9.8 billion) through the listing of its ground-handling, cargo and maintenance units to finance aircraft orders and operating costs.

Saudi Arabian Airlines’ Chief Financial Officer Muhammad Al Bakri told reporters in Dubai on Monday the 2 billion riyal initial public offering of Saudi Ground Services will happen in the “coming weeks” after the planned September listing was postponed.

The listing of 30 per cent of the cargo unit is planned for next year, while the 30 per cent listing of maintenance unit is set to be floated in 2017, he said on the sidelines of the Aviation Festival.

Al Bakri said the airline, also known as Saudia, will float the cargo and maintenance units for “at least” double the value of Saudi Ground Services.

“Cargo and maintenance would be much more [than the ground services listing] because they are much larger operations, especially maintenance,” he said.

The 10 billion riyal will be used to finance the airlines expansion plans as it moves to fill a shortage of around 3 million seats a year in the Kingdom.

Saudi Arabian Airlines has 16 aircraft left for delivery from 90 ordered six years ago and plans to at least double its fleet from 120 today to 240 by 2020, Al Bakri said.

Al Bakri said the airline will take the 16 aircraft on a lease-back model, which is where someone else purchases the aircraft and the airline leases them for a period of use.

Earlier this year, the airline secured a 7 billion riyal for aircraft orders. Al Bakri said on Monday Saudi Arabian Airlines will decide in the next six months on a sukuk or conventional bond to raise funds for the bulk of fleet expansion plans as well as to consolidate its debt.

“We are not looking at a single option, we are looking at multiple options,” he said.

Saudi Arabian Airlines plans to retire 22 Boeing 777-200’s, that are on average 15 years old, for new 777-300ER’s (extended range), Al Bakri said.

Plans to list the three units follow the airlines 2006 announcement that it would partially privatise six of its units. The first, Saudi Airlines Catering raised $347 million after an IPO that saw the listing of 30 percent of the unit in 2012.

Al Bakri also said the airline is not concerned about the recent shaky performance of Arab Gulf markets, including Saudi Arabia, but is “shocked” by the drop in oil prices.