Saudi Arabia’s Ambitious Tourism Drive Sparks Talks of Saudia Acquisition by Wealth Fund
Last Updated on March 18, 2024 1:18 pm
Saudi Arabia’s Public Investment Fund (PIF) is reportedly in early discussions to acquire the national carrier, Saudia, as part of its ambitious plans to transform the kingdom into a tourism powerhouse.
Sources familiar with the matter revealed that the sovereign wealth fund is contemplating a potential deal that would integrate Saudia, with its 80-year legacy, into its expanding portfolio of aviation assets. The move aims to enhance operational efficiency and profitability, potentially paving the way for privatization or amalgamation with Riyadh Air, a new carrier being established by the wealth fund.
While the valuation of Saudia in this potential deal remains uncertain, the PIF has historically received government assets to prepare them for privatization without direct financial transactions. Saudia, boasting a fleet of over 142 aircraft and servicing more than 90 destinations globally, stands as a prominent entity in the kingdom’s aviation sector.
Despite the discussions being in their nascent stages, no final decisions have been reached, and the outcome remains subject to change or abandonment, according to insiders.
Both Saudia and the PIF declined to comment on the matter.
Saudi Arabia’s vision to position Riyadh as a thriving business hub and compete with established Gulf carriers for international transfer traffic is central to this strategic move. Riyadh Air, established by the PIF, aims to expand its network and challenge regional competitors, while Saudia is expected to refocus on catering to religious pilgrimages from its base in Jeddah.
The collaborative effort between the two Saudi carriers, highlighted by a substantial order of Boeing Co. 787 Dreamliners valued at nearly $37 billion, underscores the kingdom’s commitment to bolstering its aviation sector.
With aspirations to welcome 150 million tourists annually by 2030 as part of its economic diversification agenda, Saudi Arabia sees the PIF as a pivotal entity driving these ambitions forward. From the redevelopment of Riyadh’s airport into a global aviation hub to investments in aircraft leasing and engineering subsidiaries, the wealth fund is at the forefront of reshaping the kingdom’s tourism landscape.