Saudi Arabian Airlines has become the latest Gulf company to delay an initial public offering (IPO).
The state-owned carrier, also known as Saudia, said yesterday it expected to delay the IPO of its catering unit, which was estimated to be worth up to US$540 million.
"We have submitted our file to the Capital Market Authority and haven't been given a date yet but most likely it will be delayed," said Khalid Almolhem, Saudia's director general.
It is the second time the flotation has been delayed, but Mr Almolhem could not give a time frame for the delay or specific reasons behind it.
It is a familiar story around the region, where many flotations have been pushed back, including Topaz Energy, Kuwait Energy and the mobile operator Axiom in the past year.
"It hasn't been the best market to list anywhere in the region," said Akram Annous, a strategist at Al Mal Capital in Dubai, repeating a common concern about the lack of volumes of shares traded in most GCC and Middle East markets.
He added that for some companies in Saudi Arabia "it is so easy to borrow at such little cost rather than go through equity financing".
Even if Saudia went ahead with an IPO, trading is largely limited to local investors because foreign investors are able to invest only via "total return swaps" - an indirect way into Saudi shares.
The kingdom is attempting to become more open, however, and is in talks with several index providers, including MSCI, to become one of its components.
But Mr Annous was sceptical over the speed of change.
"Things are very slow to take off in the region, especially Saudi, and it could be another several years before this actually happens," he said.
Saudia started the process of privatisation back in 2006 by dividing the company into six units. It is waiting for regulatory approval to offer 30 per cent of its catering unit to the public.