Saudi Arabia's Public Investment Fund (PIF), the kingdom's sovereign wealth fund, is in preliminary discussions to acquire Saudia, the country's national airline, according to sources familiar with the matter. This move comes as the PIF ramps up investments aimed at transforming Saudi Arabia into a major tourism destination.
The potential acquisition would add the 80-year-old Saudia to the PIF's growing portfolio in the aviation sector. The deal could be finalized as early as next year, transferring ownership of the airline from the government to the PIF. This shift is expected to be accompanied by efforts to improve Saudia's efficiency and profitability.
The PIF's interest in Saudia aligns with its broader strategic vision for the kingdom's tourism industry. Saudi Arabia has ambitious plans to attract 150 million tourists annually by 2030. A robust and competitive national carrier is seen as a critical component to achieving this goal. Saudia would play a key role in attracting leisure travelers by offering a wider range of destinations and potentially enhancing its in-flight services.
The potential acquisition could also reshape the dynamics within Saudi Arabia's aviation sector. The PIF already holds a stake in Riyadh Air, a relatively new airline focused on budget travel and regional connectivity. Analysts suggest that a PIF-owned Saudia could see a strategic realignment with Riyadh Air. Saudia might focus on premium services and long-haul destinations, while Riyadh Air caters to the budget travel segment. This potential collaboration could allow both airlines to compete more effectively with regional giants like Emirates and Qatar Airways.
There are still uncertainties surrounding the potential deal. The exact valuation of Saudia and the timeline for the acquisition remain undisclosed. Additionally, the PIF's plans for integrating Saudia into its existing aviation portfolio are yet to be revealed.
Despite the unknowns, the talks between the PIF and Saudia signal a significant development in Saudi Arabia's aviation landscape. If the acquisition is finalized, it could have far-reaching consequences for the national carrier, the tourism industry, and the broader aviation sector within the region. The focus on improving efficiency and profitability suggests that the PIF might prioritize transforming Saudia into a commercially successful airline, while simultaneously serving the kingdom's tourism goals.