Saudi Arabia’s state-owned Public Investment Fund (PIF) is reportedly in preliminary discussions to acquire the country’s premier airline, Saudia, as part of a multi-billion dollar initiative aimed at transforming the nation into a destination for tourists.
The PIF is contemplating an acquisition that would incorporate the 80-year-old Saudia into its expanding aviation holdings as early as the upcoming year. Insiders, choosing to remain anonymous due to the confidential nature of the talks, indicate that the PIF’s goal is to transition ownership of the airline from the state to the fund, with intentions of enhancing operational efficiency and profitability. Subsequent possibilities include either the privatization of Saudia or its amalgamation with the PIF’s fledgling airline, Riyadh Air.
The method of valuation for Saudia by the PIF remains uncertain. Historically, the fund has received government assets without monetary exchange in preparation for their eventual privatization. Saudia boasts a sizable fleet of over 142 aircraft and services more than 90 global destinations.
However, the acquisition is far from confirmed. The ongoing dialogue is still in nascent stages and may undergo postponement or cancellation, with no concrete resolutions reached yet. Official spokespeople for both Saudia and the PIF have refrained from commenting on the matter.
Saudi Arabia is intent on establishing Riyadh as a formidable business nexus and aims to rival larger Gulf airlines for international transfer traffic. The newly formed Riyadh Air is part of this strategic vision, anticipated to contend with established carriers such as Emirates and Qatar Airways. Concurrently, Jeddah’s Saudia is realigning its focus towards accommodating religious pilgrimages.
In a collaborative effort last year, the two Saudi airlines placed a joint order for 78 Boeing 787 Dreamliners, a transaction the White House estimated to be valued at nearly $37 billion.
By the year 2030, Saudi Arabia targets to draw in 150 million tourists annually as a component of a broader economic diversification strategy, reducing reliance on oil-generated revenue. The PIF is poised to play a pivotal role in this endeavor, with projects including the overhaul of Riyadh’s airport into a leading global aviation hub, the launch of an aircraft leasing enterprise, a helicopter service, and investment in Saudia’s engineering offshoot.