Saudi Arabian Airlines plans to hold in the second quarter a delayed initial public offer of its catering unit estimated to be worth up to $540 million, its top executive said.

The Saudi national carrier started a long process of privatisation in 2006 by dividing the company into six units - catering, cargo, maintenance, airlines, flight academy and ground handling.

It plans to privatise each of the units individually, before offering them to the public through IPOs.

'We are almost done with all the requirements (for the catering IPO) and they are in the process of submitting to the capital market authority. We are hoping in Q2,' director general Khalid Almolhem told Reuters on Monday.

The IPO was initially planned for the third quarter of last year.

He did not give an estimate for the size of the IPO although analysts say it could be between $400 million and $540 million.

The catering unit was first to be privatised, by selling 49 per cent to investors in 2008 and is now completing requirements to offer 30 per cent to the public. French bank Credit Agricole is advising on the planned IPO.

The maintenance unit will start making arrangements to sell a stake later this year, Almolhem said.

'We haven't decided how much but we are open,' he said. 'We are hoping to have a teaser going within the next month to invite people to see their appetite,' he added.

 It would take at least two to three years before the ground handling unit can undergo an IPO. 'It will take some time. We just need to do some work on the restructuring and the issue with local fares to make sure it can happen,' he said.

Saudi Airlines Cargo was privatised, with 30 per cent now owned by Tarabut Air Freight Service, while the ground handling services unit was merged last year with National Handling Services and Attar Travel Company.

'Now we have one single company with Attar and National Services (The IPO) will take two to three years before we can put it on track.'

The airline unit will still take some time before it can be privatised, Almolhem said, as the company tries to restructure it. 

Saudi Airlines has a fleet of 137 aircraft, mostly Boeings and Airbus planes, and awaiting delivery of 12 more by the end of the year, according to its website.-Reuters