Saudi Arabia’s Public Investment Fund in negotiations to acquire state-owned Saudia airline

According to experts, discussions are underway for Saudi Arabia’s sovereign wealth fund to acquire the national carrier Saudia, a potential move that experts believe could enhance the airline’s management.

According to sources who spoke with Bloomberg earlier this week, discussions are currently taking place between the Public Investment Fund (PIF) and government officials in an effort to enhance the efficiency of the state-owned airline through a potential deal.

According to reports, the investment fund has ambitious plans to turn Saudia into a profitable entity before considering options to either privatize the company or merge it with Riyadh Air, which is owned by the PIF.

The PIF, headed by Crown Prince Mohammed bin Salman and boasting $925 billion in assets ranging from tourism companies to football clubs, is a key part of the de facto ruler’s Vision 2030 economic plan.

Tourism is a key part of this diversification effort, with the PIF hoping to improve Saudia’s operations to attract more tourists to the kingdom and increase revenues.

Long closed to tourists, Saudi Arabia has seen massive growth in the tourism sector in recent years, with sports, entertainment, and other events all drawing in visitors, along with developments such as Al-Ula.

Saudi Arabia saw a 56 percent increase in visitors in 2023 compared to 2019, the year before the Covid-19 crisis broke out.

Saudia was formed in 1945, making it one of the Gulf’s oldest national carriers, but its profile has been eclipsed by neighbouring airlines such as Qatar Airways, Emirates, Oman Air, and Etihad.

In 2023, Prince Mohammed announced the launch of a second national carrier, Riyadh Air, which is run by the PIF, as a competitor to rival Gulf airlines.

Riyadh Air also provides the kingdom with a modern and efficient transport carrier that will be essential if Saudi Arabia is ever to become a regional tourism hub.

Experts say transferring Saudia to the PIF will mean access to its extensive infrastructure, networks, and other assets, including the low-cost airline flyadeal.

Saudia is a key player in the Hajj and Umrah pilgrimages, which sees millions of Muslims descend on the kingdom each year.