Saudi airline Flynas to seek IPO regulatory approval by mid-2017

[DUBAI] Saudi budget airline Flynas plans to seek regulatory approval this year for an initial public offering that would make it the first carrier to be listed on the country's stock exchange, part of a broader effort to diversity the economy in the face of weak oil prices.

The closely held carrier, which announced an deal for 80 Airbus Group SE planes on Monday, is working with Banque Saudi Fransi and expects to apply for clearance from Saudi Arabia's Capital Market Authority by mid-2017, chief executive officer Paul Byrne said in a phone interview.

In 2016, Flynas recorded its second profitable year since beginning operations a decade ago, he said, declining to provide figures.

"We've been profitable for the past couple of years, so it's something we need to think about," Mr Byrne said. "The percentage to be floated is up to the shareholders to decide."

The Riyadh-based carrier, which began flying as Nas Air in 2007, is partly owned by Kingdom Holding, the investment vehicle of Saudi billionaire Prince Alwaleed Bin Talal. It's been considering a share sale since 2008, and it hired the Saudi-French bank to advise on the IPO in 2013.

ECONOMIC STRATEGY

Saudi Arabia is seeking to generate private investments across a range industries amid a wider plan to reduce the country's reliance on oil revenues and scale back the government's role in the economy.

The state budget deficit is expected to reach 17.8 per cent of gross domestic product this year. The country's large and lucrative domestic aviation market has already attracted local and foreign operators, increasing competition for Flynas.

The IPO plans come as the carrier finalised an order for 80 Airbus A320neo single-aisle airliners, including converting an existing contract for 20 current-model A320s to the newer version. The order, valued at US$8.6 billion at list prices, is more than double its current fleet of 28 leased A320s.

The deal also includes purchase options for another 40 A320neos. The new planes could be used to serve new markets such as Pakistan and India, Mr Byrne said.

The carrier expects to receive bids from United Technologies Corp's Pratt & Whitney division and General Electric Co to supply the new planes' engines, Bandar Al Muhanna, chief executive of Flynas parent company Nas Holding, said in an interview in Riyadh. A decision is likely in the next couple of months, Mr Byrne said.

Flynas is facing increasing competition in its home market after Saudi Gulf Air and Nesma airline were granted domestic operating licenses last year. State-owned network carrier Saudia has plans for its own low-cost division, Flyadeal, that will launch at mid-year, while Qatar Airways-owned Al Maha Airways is still waiting for a Saudi operating license. Rivals abroad include Sharjah-based Air Arabia and FlyDubai.

BLOOMBERG