Catering to Businesses

Is the company planning to expand overseas or consolidate its market share in the country?

Saudi Airlines Catering has one overseas catering unit in Cairo. We are currently obtaining approval from the Egyptian Airport Authority to open a new First & Business Class Lounge to serve the over 100,000 passengers who depart from Cairo International Airport annually. This is the only expansion plan we have outside of Saudi Arabia. All our other expansion activities will be within Saudi Arabia because the market potential is huge. We will continue with our product and service diversification domestically.

What projects do you have in the pipeline for your catering business?

We have started other business lines to be launched to the market soon. Our major focus now is our Hajj model. We spent three years educating Hajj and Umrah organizers on the concept of frozen meals and getting food to Mecca ready to be cooked in a short period of time to cater to religious pilgrims. They need to be able to provide a huge number of meals, and we produce safe and temperature-controlled meals in large volumes that other caterers and businesses can use. These frozen meals have no additives and a shelf life of up to a year. We have three freezing tunnels in Riyadh with a capacity for 27 million meals. We have the infrastructure in place to increase that number by another 9 million within four months. We currently supply a few companies and the business is growing. It is better and more cost effective because companies do not waste any raw material and do not have to do the preparation work. Saudi Airlines Catering produces and delivers the meals to them and all they need to do is store, reheat, and serve them. This is a huge business. A study done in 2013 found that SAR18 billion ($4.79 billion) worth of food was consumed in Mecca and Medina during the Hajj and Umrah periods. We have done a great deal of work engaging and lobbying on this. We also seek government support for this enterprise to work on a larger scale. Additionally, we supply pre-cut vegetables and recently opened our own smoking plant in Riyadh to produce high-quality smoked food products instead of importing them. We will use the products in our operations and to supply hotels and other businesses in 2016.

How is your company dealing with the privatization of the sector?

Saudi Airlines Catering was privatized in 2008 and became a publicly listed company in 2012. Our business growth has been solid and consistent with no issues, regardless of our share price in the market. Consistently, we are committed to quality and efficiency to be in a prime position for any emerging market. A license was recently granted to Swissport for ground-handling services. We expect that a license will also be on offer for catering services; nevertheless, we have the major share of Saudi Arabian Airlines’ business. The airline is one of our major shareholders, and we are confident it will continue to use our catering services. We are working on our efficiency in all business areas to meet the competitive challenges that are coming.

What challenges and opportunities do you see in air travel?

There is growth, and it is reflected in our business performance. This will also be augmented with new airlines coming in, as well as additional demand from other airlines. We already cater for almost 50 airlines. Saudi Arabian Airlines also announced some new routes, including Istanbul and the Maldives, starting in 2Q2016. We are ready for this increase in business volume. We have developed our Central Production Unit in Riyadh and have consolidated all our economy-class production to that site. Our existing capacities in Jeddah, Riyadh, Dammam, and Medina are now available for additional catering services to business class, private flights, and other airlines. This keeps us aligned with airline and airport expansions that are launching.