Saudi Arabia's sovereign wealth fund is currently engaged in preliminary discussions to acquire the Kingdom's flagship airline as part of its efforts to transform the country into a prominent tourist destination.
The Public Investment Fund (PIF) is exploring the possibility of including Saudia in its aviation portfolio as early as next year, with plans to invest billions of dollars, as reported by Bloomberg.
Insiders familiar with the matter revealed that the PIF intends to take control of the airline from the government to enhance its profitability and operational efficiency.
Furthermore, there are considerations to potentially list the carrier for sale or merge it with Riyadh Air, a new airline being established by the wealth fund.
The exact valuation of Saudia by the PIF remains uncertain at this stage. Saudia currently operates a fleet of 142 aircraft and serves over 90 destinations worldwide.
However, it's important to note that final decisions regarding this potential acquisition are still pending, as discussions are in their early phases and the concept could be delayed or abandoned altogether. Both the airline and PIF representatives have chosen not to comment on these developments.
Saudi Arabia's overarching goal is to position Riyadh as a central hub for business activities and compete with other Gulf airlines in capturing global transfer traffic.
Riyadh Air, backed by the PIF, aims to expand its network and vie with regional giants such as Emirates and Qatar Airways.
Meanwhile, Saudia, being the largest airline in the Kingdom, is redirecting its focus towards facilitating religious pilgrimages.
In 2023, both Saudi carriers placed orders for 78 Boeing 787 Dreamliners valued at over $37 billion, as assessed by the White House.
The Kingdom's vision is to attract 150 million tourists annually by 2030 to diversify its economy and reduce its reliance on oil by boosting foreign currency inflows.
The PIF plays a crucial role in this strategic plan by overseeing the development of Riyadh's airport into a major global aviation hub.
Furthermore, the fund has initiated several ventures including an aircraft leasing company and a helicopter firm, in addition to investing in Saudia's engineering subsidiary.
Saudi Arabia has successfully secured $13 billion in private sector investments for its burgeoning tourism industry. Princess Haifa Al-Saud, the Kingdom's vice minister for tourism, stated that these investments aim to share the costs associated with becoming a top tourism destination.
Princess Haifa also mentioned in an interview with Bloomberg that the investments are expected to increase the number of hotel rooms by 150,000 to 200,000 within the next two years.
The Kingdom's objective is to elevate tourism revenue to $85 billion this year, up from approximately $66 billion in 2023, as outlined by Princess Haifa. She further emphasized the goal of increasing tourism's GDP contribution from the current 4.5 percent to 10 percent by 2030.
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