Saudi sovereign fund in talks to buy national airline

Saudi Arabia’s Public Investment Fund is in discussions to acquire the kingdom’s national airline, reports released on Monday indicate.

The $940 billion sovereign fund is looking to add Saudia, formerly known as Saudi Arabian Airlines, to its portfolio and a deal could be completed as soon as next year, according to a report by Bloomberg, quoting unnamed sources.

Saudia is under the ownership of the Saudi government, but the article suggests a purchase by PIF could lead to the 80-year-old airline merging with Riyadh Air, which is owned by the wealth fund.

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Saudia is based in Jeddah and operates its main hub from the city’s King Abdulaziz International Airport and King Khalid International Airport in Riyadh. 

The airline carried more than 30 million passengers in 2023, a 21 percent year-on-year increase on higher seat capacity and flight frequency.

Saudia operates flights to more than 100 destinations across four continents through its fleet of 142 aircraft.

Riyadh Air was launched in March last year. The new carrier is scheduled to take to the skies next year and is targeting 100 destinations in its first five years.

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The airline has firm orders for 39 long-range B787s and options for 33 more, part of a double deal in which Saudia also booked 39 B787s and 10 options, which was valued by the White House at close to $37 billion.

Riyadh Air is expected to add $20 billion to Saudi Arabia’s non-oil GDP growth and create more than 200,000 jobs both directly and indirectly, it said.

Saudi Arabian aviation is scheduled to treble in the next six years, while the kingdom has set itself the goal of welcoming 150 million annual visitors by the end of the decade across 29 Saudi airports, including a new Riyadh airport to be operational by 2030.

PIF is behind the redevelopment plans for Riyadh Airport, with ambitions to make it the biggest in the world. The fund also owns Saudi jet leasing business AviLease, as well as The Helicopter Company, which was founded in mid-2019 and operates 47 helicopters.

In December PIF announced plans to develop a one million-square-metre maintenance, repair and overhaul village in Saudi Arabia as part of its investment in Saudia Technic, a subsidiary of Saudia Group.