Saudi Arabia appointed Khaled al-Mulhim as the new senior manager of Saudi Arabian Airlines on Tuesday, a move that could be a step towards privatizing the flag carrier.

Finance Minister Ibrahim al-Assaf said last week that the airline, one of the three largest in the Middle East and North Africa, could be the kingdom's next major privatization.

Al-Mulhim was instrumental in the privatization of Saudi Telecom (STC), which he left as chief executive in February.

State news agency SPA said al-Mulhim will replace Khaled bin Abdallah Bikr as general manager of the airline. SPA said Bikr left the company at his own request. Resignations are rare in Saudi Arabia's official apparatus.

"Bikr was a very efficient bureaucrat but it's clear that al-Saudia now needs a new breed of executives that will ensure a smooth transition to its new destiny," said a senior banker familiar with the company.

The flag carrier has to prepare for its privatization, which sources said would start with an initial public offering within two to three years, and also confront growing competition as the country liberalizes air transport.

Saudi authorities have so far licensed two private airline companies.

Mulhim told Dubai-based al-Arabiya television channel the new competition would be a "qualitative leap" for the firm. "It will impose a different performance in terms of efficiency and advanced productivity," he said.

"We have to look at what is the best way to optimize the value of the company at its privatization and flotation," he added.

The company carried around 15 million passengers in 2005.