National carrier Saudi Arabian Airlines (Saudia) is seeking to raise SR5 billion ($1.3 billion) via the first tranche of a Sukuk (Islamic Bonds) issuance program in the second or third quarter of this year, its Director General Saleh Al-Jasser said on Tuesday.

The funds will be used to finance fleet expansion, as the carrier aims to operate 200 aircraft by 2020, he told reporters at a business conference.

Details of the second tranche of the sukuk program have not been determined, he added.

The airline has been spinning off units in the last several years; it is now preparing documentation to hive off its cargo unit in an initial public offer of shares, Jasser said without giving details.

Saudia is the third largest in the Middle East in terms of revenue, behind Emirates and Qatar Airways. It operates domestic and international scheduled flights to over 120 destinations in the Middle East, Africa, Asia, Europe and North America. Domestic and international charter flights are operated, mostly during the Ramadan and the Hajj season.

Saudia is a member of the Arab Air Carriers Organization. The airline joined the SkyTeam airline alliance on 29 May 2012.