Saudi's Sama Delays Aircraft Orders Amid Credit Crunch
DUBAI (Zawya Dow Jones) -- Saudi Arabian low cost airline Sama will delay buying new aircraft because of the liquidity crunch hitting global debt markets, the airline's chief executive said Monday.
"Given the current credit crunch it doesn't make sense for us to start jumping into the aircraft market," Andrew Cowen told Zawya Dow Jones on the sidelines of an aviation conference in Dubai. "There's an asset price bubble across the world so we've got to consider that and tread cautiously."
Established in December 2005 with a $50 million equity capital, Sama currently operates five aircraft with 30 daily flights between six main cities in Saudi Arabia.
The low-cost airline will take delivery of a sixth aircraft in October to support new routes in the kingdom, and a further four aircraft in the next six to eight months.
Sama plans to expand its fleet to 35 by 2010, but will take the new aircraft on an operating lease basis.
"The new aircraft market is very overblown at the moment and aircraft are very expensive. The leased aircraft will be financed from our existing cash flow so we don't see the need to go for financing options," Cowen said.
Earlier this year, the airline raised a further $30 million from its founding investors.
"Given the current turmoil we thought it made sense to go back to our original investors," Cowen said.
However, Cowen said Sama may take advantage of order cancellations resulting from the international credit crunch.
"With this subprime crisis we may see some of these orders coming back into the market, in which case we want to be ready to take advantage," he said.
Cowen denied press reports that the airline plans to launch an initial public offering, or IPO, in 2008.
"We don't have any concrete plans to IPO next year. We're a private airline that's growing very strongly. We have a very broad investor base and we want to focus on them for the time being," he said.
Sama, which competes with NAS Air for a share of Saudi's low cost domestic carrier market, will focus its expansion in the kingdom and the Middle East region.
"We want to set up a strong platform in Saudi and expand our base from there. We see Saudi and the wider Middle East markets as some of the most attractive aviation markets in the world," Cowen said. "Low cost carriers currently have a 2% penetration level in the region, while this level is much higher in places such as the U.K. and the U.S."
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Source: http://www.marketwatch.com
Copyright (c) 2007 Dow Jones & Company, Inc.
Contact: 201-938-5400
DUBAI (Zawya Dow Jones) -- Saudi Arabian low cost airline Sama will delay buying new aircraft because of the liquidity crunch hitting global debt markets, the airline's chief executive said Monday.
"Given the current credit crunch it doesn't make sense for us to start jumping into the aircraft market," Andrew Cowen told Zawya Dow Jones on the sidelines of an aviation conference in Dubai. "There's an asset price bubble across the world so we've got to consider that and tread cautiously."
Established in December 2005 with a $50 million equity capital, Sama currently operates five aircraft with 30 daily flights between six main cities in Saudi Arabia.
The low-cost airline will take delivery of a sixth aircraft in October to support new routes in the kingdom, and a further four aircraft in the next six to eight months.
Sama plans to expand its fleet to 35 by 2010, but will take the new aircraft on an operating lease basis.
"The new aircraft market is very overblown at the moment and aircraft are very expensive. The leased aircraft will be financed from our existing cash flow so we don't see the need to go for financing options," Cowen said.
Earlier this year, the airline raised a further $30 million from its founding investors.
"Given the current turmoil we thought it made sense to go back to our original investors," Cowen said.
However, Cowen said Sama may take advantage of order cancellations resulting from the international credit crunch.
"With this subprime crisis we may see some of these orders coming back into the market, in which case we want to be ready to take advantage," he said.
Cowen denied press reports that the airline plans to launch an initial public offering, or IPO, in 2008.
"We don't have any concrete plans to IPO next year. We're a private airline that's growing very strongly. We have a very broad investor base and we want to focus on them for the time being," he said.
Sama, which competes with NAS Air for a share of Saudi's low cost domestic carrier market, will focus its expansion in the kingdom and the Middle East region.
"We want to set up a strong platform in Saudi and expand our base from there. We see Saudi and the wider Middle East markets as some of the most attractive aviation markets in the world," Cowen said. "Low cost carriers currently have a 2% penetration level in the region, while this level is much higher in places such as the U.K. and the U.S."
--------------------------------------------------------
Source: http://www.marketwatch.com
Copyright (c) 2007 Dow Jones & Company, Inc.
Contact: 201-938-5400
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