Saudi private carrier National Air Services (NAS) said on Monday it would launch the kingdom's first low-cost airline and was also preparing for an initial public offering in two years.
"We are now in the process of converting from a limited liability company to a joint stock company in preparation for an IPO after two years," NAS Chief Executive Mohamed Al Zeer told reporters at the Dubai Airshow.
He said NAS was negotiating with European plane maker Airbus to acquire four A320s as a starting fleet for the new low-cost carrier, which is yet to be named and will have a start-up capital of $200 million.
"We will start with four aircraft and grow to 16 aircraft in five years. We are looking at four A320s with Airbus, and we are finalising talks," Zeer said.
"The Saudi market has the highest potential regionally in terms of affluence, a large population and frequent visitors to religious sites that are sacred to all Muslims," he said.
The new fleet will be financed by an international lending institution, a company statement said. NAS is also setting up a $100 million luxury airline, Al Khayala, to fly between the capital Riyadh and the Red Sea city of Jeddah.
The private carrier said on Sunday it had signed a $250 million contract to buy five Airbus A318 Elite planes and would probably take an option to buy a further five planes.
Zeer told Reuters in Dubai on Sunday that NAS already had customers signed up and interested in the new aircraft, saying they would not be used for its Al Khayala luxury airline.
NAS officials said Calyon Bank, the investment banking division of France's Credit Agricole, would finance 85 percent of the deal for A318s and that the first planes would be delivered in the fourth quarter of 2006.