VZCZCXRO5235
PP RUEHDE
DE RUEHJI #0244/01 0880657
ZNY CCCCC ZZH
P 290657Z MAR 06
FM AMCONSUL JEDDAH
TO RUEHC/SECSTATE WASHDC PRIORITY 8963
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEHLO/AMEMBASSY LONDON PRIORITY 1323
RUEHFR/AMEMBASSY PARIS PRIORITY 1395
RUEHRH/AMEMBASSY RIYADH PRIORITY 6315
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/DIA WASHDC PRIORITY
RHEHAAA/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 JEDDAH 000244 
 
SIPDIS 
 
SIPDIS 
 
RIYADH, PLEASE PASS TO DHAHRAN; DEPARTMENT OF NEA/ARP; 
PARIS FOR ZEYA; LONDON FOR TSOU 
 
E.O. 12958: DECL: 03/26/2015 
TAGS: EAIR ECON KISL PREL SA
SUBJECT: SAUDIA TECHNICAL INSPECTION AND PROSPECTS FOR 
PRIVATIZATION 
 
REF: 05 JEDDAH 4961 
 
Classified By: Consul General Tatiana Gfoeller, for reasons 
1.4 (b) and (d). 
 
¶1.  SUMMARY.  This is one in a series of cables reporting on 
the civil aviation sector in Saudi Arabia.  Saudi Arabian 
Airlines (Saudia) technical repair facility in Jeddah was 
subject to an FAA re-certification inspection in mid-March. 
The inspectors found no serious deficiencies.  Corrective 
action was immediately undertaken by the airlines, although 
some remedial steps may take as much as a year to complete. 
Saudia's training academy was praised by one inspector.  The 
results of the inspection suggest that Saudia's preparation 
for privatization could impose difficult budget demands and 
require significant reductions in personnel.  END SUMMARY. 
 
FAA INSPECTS SAUDIA TECHNICAL CAPABILITIES 
 
¶2.  (C) On March 22, Saudi newspapers reported that the 
Supreme Economic Council had approved the plan presented by 
Saudia management for the privatization of the Company.  This 
announcement chanced to come the week after an FAA technical 
re-certification inspection team was in Jeddah to assess the 
Saudia maintenance facility's compliance with FAA guidelines. 
 Jeddah Pol/Econ Chief attended their initial and final 
briefing with Saudia Quality Control executives. (Note:  The 
final briefing was also attended by ConOff.  End Note.). 
Pol/Econ Chief also accompanied one of the FAA inspectors 
during his tour of Saudia's Prince Sultan Aviation Academy 
facility for training aircraft maintenance technicians.  The 
results of the technical evaluation, the expert assessment of 
the FAA inspectors provided to Pol/Econ Chief, and 
observation of Saudia management's response to the team's 
findings provide insight into the airline's performance and 
potential for successful privatization.  The FAA has not 
cleared this cable. 
 
TECHNICAL CONDITION TYPICAL 
 
¶3.  (C) The FAA team characterized their findings concerning 
the Saudia maintenance facility as routine.  No major, 
serious deficiencies were discovered.  Many of the repair 
stations they examined were judged to be well-maintained and 
managed and staffed by knowledgeable and competent staff. 
However, they did find a number of practices and conditions 
that deviated from the standards specified by FAA regulations. 
 
AREAS IN NEED OF ATTENTION 
 
¶4.  (C) The technical library, the inspectors discovered, was 
not verifying that manuals Saudia used were current, but the 
inspectors were confident that this problem could be 
corrected quickly.  A greater problem was the repair 
facility's "High Bay" spare parts store, a large warehouse 
with parts storage drawers twenty feet high, storing all 
spare parts for the repair facility and the airline.  The 
team found "the entire place was very dirty and there were a 
lot of parts that did not have paperwork to trace where they 
came from.  They seem to have a pretty good handle on how to 
correct this, but it will take several months, if not an 
entire year to accomplish this."  Re-certification 
requirements will be satisfied when the FAA receives a copy 
of an acceptable corrective plan from Saudia. 
 
INSPECTORS IMPRESSED BY MANAGEMENT ATTITUDE 
 
¶5.  (C) In an aside to Pol/Econ Chief, the FAA examiners 
unanimously complimented the Saudia managers with which they 
worked for their willingness to rectify the deficiencies 
cited.  Saudia management accepted the findings and planned 
remedial measures while the inspection team was still 
conducting its assessment.  The lead investigator stated that 
several of the deficiencies were successfully corrected by 
the time the team left the facility.  He also noted that in 
the other cases, including the very daunting task of cleaning 
their massive parts storage facility, management had already 
committed significant staff and resources to carrying out or 
planning corrective action.  In observing the out-brief 
between FAA and Saudia Quality Control management, Pol/Econ 
also noted that the senior managers present accepted the 
inspectors assessment with a determination to correct 
 
JEDDAH 00000244  002 OF 003 
 
 
problems and acknowledged the immediate need for reformation. 
 
INSPECTION OF TECHNICAL TRAINING ACADEMY 
 
¶6.  (C) At the request of Saudia management, one of the 
inspectors, with a background in technical training, 
accompanied by Pol/Econ Chief, toured the airline's Prince 
Sultan Aviation Academy for technical training.  After 
touring the facility located in central Jeddah, only a few 
blocks from the Consulate, the inspector described himself as 
quite impressed with the facility.  The facility, tools, and 
instructors were deemed capable of providing very good 
training to students beginning with the most basic 
maintenance tasks for untrained students to training of 
experienced technicians in new, sophisticated repair 
techniques. 
 
ACADEMY HAS ROOM TO EXPAND 
 
¶7.  (C) Notable at the time of the visit was that there were 
comparatively few students for a facility of its size and 
range of potential training courses.  There seemed to be 
substantial numbers of students in the basic training courses 
for new employees, but many of the classrooms had only a few 
students, and a number seemed to be unoccupied.  In that 
respect, after privatization, the academy would be in a good 
position to take in students from outside sources for paid 
training courses.  General Authority of Civil Aviation VP 
Berenji has told the Consulate that that this is his plan 
(reftel). 
 
WILL ACADEMY BE ABLE TO MAINTAIN ITSELF UNTIL IT BECOMES 
PROFITABLE? 
 
¶8.  (C) COMMENT:  As Saudia progresses toward privatization 
one must consider if the academy will be able to maintain its 
budget and facilities.  Many analysts have commented that 
Saudia staffing and budgets will have to be cut dramatically 
if the airline is to become competitive.  Over the course of 
two to four years, until privatization becomes a reality, 
will the relatively lightly used Academy be able to maintain 
its capabilities or will budget considerations degrade it? 
END COMMENT. 
 
SAUDIA'S MARCH TOWARD PRIVATIZATION COULD BE BUMPY 
 
¶9.  (C) At the request of Pol/Econ Chief, the FAA team leader 
shared the team's observations of Saudia's potential for 
transformation into a private company, based on their 
experience of seeing many airlines throughout the world 
struggle to privatize.  He foresaw no "issues that would stop 
them from privatization, but some areas might make them less 
attractive to investors." 
 
MANPOWER 
 
¶10.  (C) The inspector observed that "they will probably have 
to down-size the work force to make it attractive for 
privatization.  Saudi Arabian Airlines Repair Station seems 
to have plenty of workers to keep up with the needs of the 
repair Station (and the airline).  In fact, I believe they 
are over-staffed compared to the way private companies work. 
I have watched other companies go through privatization and 
it can be quite painful on the workers, which will probably 
be the case for Saudi Arabian Airlines Repair Station." 
Confirming this observation, during the tour of the Repair 
Station, personnel could be seen standing around.  As one 
inspector confided to Pol/Econ Chief, "for every guy they 
have working, there is one standing over him watching him 
work." 
 
FACILITIES 
 
¶11.  (C) "The actual size of the facility is just barely 
adequate.  For one thing, most of their hangars are not large 
enough to house their largest aircraft. In addition, the 
hangars are not air conditioned.  Human factors are becoming 
an issue now, and I would say that the quality of work might 
be affected by the discomfort of the workers during hot 
times.  (Furthermore)...without air-conditioned hangars, the 
doors will likely remain open much of the time which makes 
them susceptible to dirt and dust being blown in.  I did 
 
JEDDAH 00000244  003 OF 003 
 
 
notice that a lot of areas are dirty around the facility, 
i.e. covered with dust." 
 
TECHNOLOGY 
 
¶12.  (C) In this category the inspector referred to how 
modern the facility is in terms of equipment and methods. 
"Generally speaking, I would say that some updating is 
needed.  For instance, a lot of the manuals they are 
currently using are provided to them on disk (CD or DVD). 
But they do not have a central server to make them available 
to everyone, so they simply copy the disks and distribute 
them to those that need them.  Also the aviation test 
equipment they are using, while adequate, is not the latest 
available."  He speculated that the lack of some modern 
equipment is compensated for with extra manpower. 
 
¶13.  (C) COMMENT:  These criticisms suggest that Saudia will 
be faced with the unattractive option of being required to 
make substantial expenditures on facilities and procedural 
reforms just as they are trying to cut their costs, in order 
to become a competitive carrier.  It will bear careful 
watching in the future to see if the repair managers are able 
to wrest sufficient funds from an increasingly cost-conscious 
executive as they move towards full competition.  END COMMENT. 
Gfoeller