June 13, 2007 (KHARTOUM) — Sudan has sold off a large chunk of its unprofitable national carrier in a deal expected to add an estimated $175 million to state coffers over the next two years, government officials said on Wednesday.

A Sudan Airways plane

Under the deal signed on Tuesday, Kuwait’s Aref Investment Group will hold a 49 percent stake in Sudan Airways and Sudan’s privately owned Al-Fiha company 21 percent.

The government will retain a 30 percent stake.

"Aref and al-Fiha will pay the government $175 million over two years," Sudan’s finance ministry said on Wednesday.

Aref said it had already paid $56 million.

" Sudan Airways will keep its name and logo and continue to be the national carrier," the airline’s board chairman, Kamal Abdel Latif, said.

A new board of directors, comprising seven members — three Sudanese, three from the Aref Group and one from Al-Fiha — shall be appointed to run the company. The chairman of the board should be Sudanese.

"We believe that the partnership with Sudan Airways will be the most difficult of all our investments in Sudan," said Ali Zumaya, head of Aref, whose investments in the country total around $2 billion. But he added that he was optimistic about the future of the new partnership.

Sudan Airways said they would add a new aircraft to its fleet as early as next month.

Aref has already drawn up a five-year business plan that includes "fleet modernization, expansion of domestic and international routes and recruitment of more employees," Sudan Airways said on its website.

The company also hopes to proceed with plans for an IPO of 25 percent of its shares within the next five years, the finance ministry, which negotiated the deal, said.

U.S. sanctions, imposed on Sudan in 1997 for its alleged support for terrorism, seriously crippled the airline, whose fleet was dominated by U.S.-manufactured Boeings. Most of its pilots and technicians had also been trained on American aircrafts.

The company owns 11 planes, including a Boeing , three Airbus aircraft and five Fokker aircraft (F50), and has reduced the size of its staff by half to about 1,000.

More destinations, especially in the Gulf and Africa, have been added and last year the airline resumed its regular flights to London, its only destination in Europe, after suspending the route for several years, according to the company.

(Reuters)