Privatisation a platform to progress

Saudi Arabian Airline’s in-house engineers shoot for the stars – and the organisation’s leadership team has no doubts that the soon to be privatised business will be rated among the best in the industry. 

“We aim to be a major player,” said Ali Milaat, managing director of what will be known as Saudia   Aerospace Engineering Industries (SAEI). “As the biggest, most capable MRO operation in the region, we have tremendous capacity that up to now we have not made available to the open market.”
 
Currently a wholly owned subsidiary of the Saudi national carrier, the Jeddah-headquartered company is due to be privatised in the third quarter of this year. The move will introduce significant new ownership from outside the airline, usher in a formal change of identity to Saudia Aerospace Engineering Industries (SAEI), and fire the starting gun for a campaign to significantly grow third-party business.
 
“We expect the company to be fully independent  and operating at arm’s length from the airline some time after the middle of the year,” said Milaat. “Saudi Arabian Airlines will retain a majority stake, but around 30-40 per cent of the shares will be in other hands, so our relationship with the airline will be rather different.”      
 
Heading an organisation with 5,300 employees and deep expertise in airframes, engines, components and ground support equipment, Milaat draws his inspiration from the story of Emirates airline. “Twenty five years ago everyone laughed when they described their plans – nobody’s laughing now,” he said. “We have similar ambitions. First we want to win home base by further developing our infrastructure to support expansion. Then we’re going to compete with the major international players on their own turf.”   
 
Milaat pointed to a number of existing strengths that will help SAEI to run with the big boys in the future. “We’re highly mobile, with the ability to recover AOG aircraft wherever they are in the world. Our on and off-wing engine maintenance is second to none: we can repair and return a GE90 faster than anyone in the world. And because of the harsh environment here we have a lot of experience in monitoring the health of engines and ensuring that they are protected to the maximum.”   
 
He also sees the company’s geographical location as a unique selling proposition. “We are the only provider with such a high level of capability between Europe and the Far East. Compared with the big international players, we enjoy the advantage of having our physical resources and personnel already established here. It’s an expensive business maintaining your people in locations far from your home base.”   
 
While air transport is and will remain the company’s prime focus, it has its eye on attracting more business from the business/VIP sector as well. “We have served private aviation for as long as Saudi Arabian Airlines has existed,” said Milaat. “But we did it in the context of our service to the airline. Now, as we separate our enterprise from the carrier, we will take with us the ability to provide full maintenance support for a much broader customer base of private operators.”
 
Due for introduction about two years hence, the offer will put it on a collision course with incumbents like Jet Aviation and Arabasco. “We aim to dominate the Saudi domestic market and also to address the regional market,” said Milaat. “The population of private jets registered in Saudi Arabia exceeds 900 aircraft, and they all need taking care of. We intend to give the owners of these aircraft an alternative to their present suppliers.”
 
The company’s credentials include years of experience with business jets, notably Gulfstream, Dassault Falcon and Cessna aircraft, and a deep capability supported by the existing air transport business. “When we talk about maintenance, we mean total fleet management, not just line maintenance, tire-kicking and dispatch. We can do modification control, tracking the aircraft, tracking their parts, all based on the largest engineering entity between Europe and the Far East.”
 
Annual revenues for Saudi Arabian Airlines Technical Services currently stand at SR5 billion ($1.3 billion), a figure that Milaat expects to see grow appreciably over the next year or two on the strength of, among other things, recent internal efficiency improvements. Beyond that, the newly reborn SAEI’s prospects for further growth could depend on whether the company chooses to compete or collaborate with the big outsiders circling the region.           
Milaat prefers the latter. “We would rather become a major player on an alliance basis,” he said. “We’re still looking for the right platform, and we expect that to become more obvious once have gone private. We already have limited agreements relating to component support in place with Air France Industries and Lufthansa Technik, who share our view that an environment of partnership is the right way ahead.”