Saudi Arabian Airlines signed a deal on Sunday to sell 80 percent of its catering unit for 1.8 billion riyals ($480 million) to a Saudi-led group including European caterer Newrest, an executive said.

"Our consortium comprises Abdul Mohsin Al Hokair group, Al-Fouzan group and Newrest as a technical partner," Badr Abdul Mohsin Al Hokair, CEO of Al Hokair, told Reuters.

The catering unit was the first of five subsidiaries that the airline, one of the Middle East's three largest, plans to privatise before moving to sell a stake in its core passenger transport business.

Hokair said the agreement for the purchase of the 80 percent stake was signed with Defence Minister Prince Sultan, who also heads the kingdom's aviation authority. He declined to give further details.

Al Hokair is a major private group with holdings in amusement parks, hotels, restaurants, industry and trading.

Launched in 1981, the catering business generated a turnover of 643 million riyals in 2005, a net profit of 142 million riyals and a net operating margin of 25 percent.

The airline also plans to split its passenger transport business into five units ahead of a privatisation. - Reuters