Potential Deal with Saudia Signals Ambitious Investment Plans to Transform Saudi Arabia into Tourism Hotspot
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), is reportedly in preliminary discussions to purchase the kingdom’s flagship carrier, Saudia, in a move aimed at injecting billions of dollars to reshape the country into a thriving tourism destination.
According to insiders familiar with the matter, the PIF is contemplating a transaction that could integrate the 80-year-old Saudia into its expanding portfolio of aviation assets by next year. The acquisition would involve transferring ownership of the airline from the government to the PIF, with a strategic focus on enhancing operational efficiency and driving profitability.
The potential acquisition could pave the way for Saudia’s privatization or its amalgamation with Riyadh Air, a new venture currently being established by the sovereign wealth fund. While the exact valuation of Saudia by the PIF remains uncertain, the fund has a track record of receiving government assets as part of its preparation for privatization initiatives.
Saudia boasts a fleet of more than 142 aircraft and serves over 90 destinations worldwide, making it a crucial player in Saudi Arabia’s aviation sector.
Although discussions are still in the early stages, with no final decisions reached, the move underscores Saudi Arabia’s aspirations to position Riyadh as a major business hub and compete with leading Gulf airlines for global transit traffic.
Riyadh Air, initiated by the PIF to bolster these efforts, aims to expand its network and challenge established regional carriers like Emirates and Qatar Airways. Concurrently, Saudia, headquartered in Jeddah and the largest airline in Saudi Arabia, is undergoing a strategic shift to concentrate on religious pilgrimages.
In a notable collaboration last year, the two Saudi carriers jointly placed an order for 78 Boeing Co. 787 Dreamliners, signaling substantial investment in the aviation sector.
Saudi Arabia has set ambitious targets to attract 150 million tourists annually by 2030, as part of its broader economic diversification strategy to reduce dependence on oil revenues.
The PIF is positioned as a pivotal state-controlled entity driving this transformation, with endeavors including the redevelopment of Riyadh’s airport into one of the world’s largest. Additionally, the fund has ventured into aircraft leasing and helicopter services while making strategic investments in Saudia’s engineering subsidiary.
