The sovereign wealth fund of Saudi Arabia is reportedly in preliminary discussions to acquire the nation’s leading airline, as part of a broader initiative to transform the country into a global touristic hub.
The Public Investment Fund (PIF) has set its sights on incorporating Saudia into its aviation holdings as early as the coming year, with plans to inject several billion dollars into the endeavor, sources close to the matter reveal.
An acquisition by the PIF would mean taking control of the airline from the Saudi government, with the objective of enhancing its profitability and operational efficiency.
Post-acquisition strategies may include floating the airline on the market or merging it with the newly established Riyadh Air, another venture backed by the PIF.
While no definite valuation for Saudia has been established, the airline boasts a fleet of 142 aircraft and offers services to more than 90 destinations worldwide.
It is important to note that these discussions are at an embryonic stage, and the plans could be delayed or scrapped entirely. Official comments from both Saudia and the PIF are currently not available.
With ambitions to position Riyadh as a key business nexus, Saudi Arabia is vying for a share of the international transit traffic currently dominated by Gulf competitors.
Riyadh Air, a brainchild of the PIF, is looking to extend its reach and stand toe-to-toe with heavyweights such as Emirates and Qatar Airways.
Concurrently, Saudia is refocusing its strategy to cater to the increasing demand from religious pilgrimages.
In a recent move signifying expansion, the two Saudi airlines placed orders for 78 Boeing 787 Dreamliners with a price tag exceeding $37 billion, according to the White House’s assessment.
By the year 2030, the Kingdom aims to welcome 150 million tourists annually, in an effort to diversify its economy and lessen its dependency on oil revenues.
Central to this tourism strategy, the PIF is overseeing the transformation of Riyadh’s airport into a premier international gateway and has launched related ventures, including an aircraft leasing entity and a helicopter service, in addition to investing in Saudia’s engineering arm.
Princess Haifa Al-Saud, Saudi Arabia’s vice minister for tourism, announced that the nation has secured $13 billion in private sector commitments for its tourism sector, distributing the financial burden of its ambitious goal to become a leading destination.
These investments are anticipated to swell the number of available hotel rooms by 150,000 to 200,000 in the next couple of years.
There are also projections to elevate tourism revenues to $85 billion in the current year, a significant increase from the $66 billion generated in 2023. The tourism sector’s contribution to the GDP is expected to double by 2030, from the current 4.5 percent to 10 percent, according to Princess Haifa’s statements in a recent interview.