Saudi Airlines Catering postpones dividend as 'precautionary measure' to preserve liquidity
Fourth-quarter payout postponed 'until further notice' as kingdom suspends flights
Saudi Airlines Catering will postpone fourth-quarter dividend distribution to company shareholders as a "precautionary measure" to preserve liquidity because of the novel coronavirus outbreak that has led the kingdom to suspend all flights.
The dividend payments, which were due on Thursday, will be postponed until further notice and after "current conditions are settled", the company said in a regulatory filing to the Tadawul stock exchange.
"This decision has been issued as a precautionary measure in order to maintain the company's liquidity to be able to confront any possible risk associated with the continuity of precautionary and preventative measures taken against the new coronavirus [Covid-19] by the competent authorities," the company said.
Saudi Arabia has halted all international flights into and out of the kingdom and suspended the Ummrah pilgrimage. On Friday, the country said it would suspend all domestic flights, buses, taxis and train services for 14 days from Saturday as a precautionary measure to curb the spread of the pandemic.
Global airlines have slashed capacity and axed jobs in efforts to preserve cash as the deadly virus damages air travel demand. Some countries have ordered a lockdown, others tightened travel bans that include banning non-residents from entry, while others have suspended flights.
The global pandemic has resulted in 307,280 confirmed cases and 13,049 deaths while 92,376 people have recovered, according to Johns Hopkins University, which is tracking the outbreak.
Saudi Airlines Catering provides catering services in-flight for airport lounges, retail and private sector companies and government offices.
The company said the decision is owing to the difficulty in determining the duration of the "precautionary and preventive" measures taken by the Saudi authorities to contain the spread of the Covid-19, with the outbreak "directly affecting air traffic" to and from the kingdom and therefore affecting related services such as in-flight catering.
Saudi Airlines Catering's revenues increased 4.6 per cent to 2 billion riyals (Dh1.95bn) in 2018 from the previous year. Net profit after zakat and income tax fell 4.6 per cent in 2018 to 459.3 million riyals from the previous year.
On Sunday, Saudi Ground Services Company also said its board recommended not distributing dividends to shareholders for the second half of its fiscal year, according to its Tadawul filing.
The move is a "precautionary measure" to support its financial position and liquidity and ensure business continuity this year as airport ground service activities slow following government measures aimed at containing the spread of the virus.
The board will present the proposal for voting at the company's next annual general meeting, it said. The date for the AGM will be determined after obtaining approval from the authorities, it added.
The company provides ground handling services such as baggage handling, cargo loading and offloading, fleet services and traffic control services at 27 airports in Saudi Arabia, according to its website.
Updated: March 26, 2020 10:26 AM