Strategic Catering Company to buy 49 per cent of Saudia Catering

Strategic Catering Company Ltd (SCC), a consortium of three companies, has won the bid to buy 49 per cent of Saudia Catering, one of the divisions of Saudi Arabian Airlines being spun off.

Saudia chairman Crown Prince Sultan signed an agreement on Sunday 23 September selling 49 per cent of Saudia Catering to the consortium comprising Abdul Mohsen Al-Hokair Tourism and Development Co, Fowzan Holding, and Newrest Group Holding.

The sale comes after the Saudi cabinet last month gave the national carrier the go-ahead to convert its strategic units into separate companies, in preparation for privatisation of the airline, the largest in West Asia, with a fleet of 120 passenger and cargo planes.

Saudia will establish six companies, for catering, maintenance, cargo, ground service, aviation service, and the Prince Sultan Aviation Academy. The airline offered to privatise its catering division in August last year and received a tremendous response from investors. Saudia Catering recorded SR643 million ($171 million) in revenue and SR142 million ($37.8 million) in net profit in 2005.

The division presently supplies 25,000 meals each day to 48 airlines. The supply reaches 100,000 meals a day in peak seasons. Saudia Catering has won several international awards.

The next strategic unit slated for privatisation is cargo, which will come up for bids before the end of this year. It will be followed by privatisation of the ground service unit and maintenance unit. The civil aviation service, which constitutes the core activity of the airline, will be the last to be privatised.

Saudia expects that participation of strategic partners in the new companies would strengthen the airline. It has said that the selling process will be carried out in a transparent manner.

Investors in each company need to have minimum qualifications and experience. Offers made by investors are opened in the presence of their representatives. The top three bidders are given another chance to review their bids and make final offers.