Saudi Arabia’s Sovereign Wealth Fund in Preliminary Talks to Acquire Saudia
Saudi Arabia’s Public Investment Fund (PIF), holding assets worth USD925 billion, is reportedly in early discussions to purchase Saudia, the national carrier based in Jeddah. Bloomberg sources suggest that this strategic move could transition the airline from government ownership directly to the PIF, aiming to enhance Saudia’s profitability and streamline its operational efficiency. This significant investment would inject billions of dollars into the airline, potentially reshaping its financial and operational landscape.
Although the talks are at an initial phase and without a confirmed outcome, this development marks a notable interest in strengthening the national airline within the kingdom’s broader economic vision. Saudia’s fleet consists of 162 aircraft servicing 105 destinations across 44 countries, with a significant portion of its fleet leased from International Airfinance Corporation, highlighting the airline’s extensive operational scale.
The negotiations emerge amid Saudia’s challenges, including ongoing litigation in the UK courts with the lessor over attempts to terminate leases. Despite these hurdles, Saudia’s CEO Ibrahim Koshy has expressed optimism about the airline’s path to profitability, contrasting its historical financial performance.
The PIF’s involvement in the potential acquisition of Saudia is part of Saudi Arabia’s ambitious Vision 2030 strategy, which seeks to transform the kingdom into a global aviation and tourism hub. This strategic direction includes the establishment of Riyadh Air, a new carrier poised to launch in 2025 with a significant order of thirty-nine B787-9 aircraft.
Speculation arises that the PIF could be considering restructuring Saudia in preparation for a future sale or merger with Riyadh Air, aligning with the kingdom’s vision for a more financially sustainable aviation sector articulated by Crown Prince Mohammed bin Salman. The memorandum of understanding signed between Saudia and Riyadh Air last November underscores a commitment to strategic cooperation between the state-backed airlines.
Beyond Saudia and Riyadh Air, the PIF’s investment in aerospace ventures extends to Saudi Arabian Military Industries (SAMI), the Helicopter Company (THC), and AviLease, an aircraft leasing business that recently expanded by acquiring Standard Chartered’s leasing arm. Moreover, there have been discussions about the PIF potentially acquiring a stake in flynas, indicating a broad and strategic interest in bolstering Saudi Arabia’s aviation industry.
This exploration of the PIF’s potential acquisition of Saudia highlights a transformative period for Saudi Arabia’s aviation sector, integral to the kingdom’s Vision 2030 objectives. As discussions progress, the aviation community awaits further developments that could significantly impact Saudia’s future and the broader trajectory of aviation in Saudi Arabia.