The board of state-owned Saudi Arabian Airlines, known as Saudia, will be restructured as the carrier targets profitability by 2020 amid the oil price slump.
King Salman, who heads the cabinet, will appoint a head for the board of directors, which will comprise four members from the public sector and another five members from the private sector pending cabinet approval, the official Saudi Press Agency reported on Tuesday.
The latest cabinet decision comes after the kingdom approved a 270 billion riyal (Dh264.43bn) National Transformation Plan for 2020, a key element of Saudi Arabia’s 2030 vision that aims to strengthen the country’s various sectors and lower dependence on oil.
“Saudia needs restructuring and customer service needs improving,” said James Reeve, the deputy chief economist at Saudi Arabia’s Samba Financial Group. “I think it’s a positive move to include so many private sector board members. Many public sector services need a shake-up and involving people who have experience of delivering successful services is clearly a positive move.”
The Saudia Group, the airline’s parent company, plans to launch a budget airline and a business jet unit to diversify the group’s operations, Saleh Al Jasser, the group’s director general, said in April. The low-cost airline called Flyadeal will be based in Jeddah and is expected to be launched in 2017. It will start with three, 48-seat Airbus A319 aircraft.
Saudia, which once enjoyed monopoly status, competes with other privately-owned low cost carriers such Sama Airlines and NAS Air.
Mark Martin, chief executive of Dubai-based Martin Consulting, seemed even more optimistic about the latest move.
“Air transport does and can have the potential to augment Saudi’s economy and I won’t be surprised if they chose to pull off a [hub model based on] ‘Turkish Airlines’ or an ‘Emirates’.”
Read the full text of the National Transformation Plan here.
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