https://arab.news/bb2zg
RIYADH: Saudi Arabia’s sovereign wealth fund is in early talks to buy the Kingdom’s flagship airline as part of transforming the country into a tourist destination.
The Public Investment Fund is considering adding Saudia to its aviation portfolio as early as next year, aiming to invest billions of dollars, according to Bloomberg.
Based on insider knowledge, the PIF would take over the airline from the government to increase profitability and efficiency, as reported by Bloomberg.
Additionally, the carrier may then be put up for sale or combined with Riyadh Air, which the wealth fund is now establishing.
The valuation of Saudia by PIF remains uncertain. Saudia operates a fleet of 142 aircraft and serves over 90 destinations globally.
Final decisions have yet to be made as talks are still in their early stages, and the idea could be postponed or discarded. Representatives from the airline and PIF declined to comment.
Saudi Arabia aims to establish Riyadh as a central business hub and compete with Gulf airlines for global transfer traffic.
Riyadh Air, established by PIF, aims to expand its network and compete with regional airlines such as Emirates and Qatar Airways.
Meanwhile, Saudia, the Kingdom’s largest airline, is shifting its attention to religious pilgrimages.
In 2023, the two Saudi carriers ordered 78 Boeing 787 Dreamliners worth over $37 billion, as evaluated by the White House.
The Kingdom aims to attract 150 million tourists annually by 2030 to diversify its economy and increase foreign currency inflow to reduce reliance on oil.
PIF plays a central role in this strategy, overseeing the redevelopment of Riyadh’s airport into a major global hub.
It has also initiated ventures such as an aircraft leasing company and a helicopter firm and has invested in Saudia’s engineering subsidiary.
Saudi Arabia has secured $13 billion in private sector investments for its tourism industry, aiming to distribute the costs involved in becoming a top destination, Princess Haifa Al-Saud, the Kingdom’s vice minister for tourism, said.
According to the minister, the investments are expected to increase the number of hotel rooms by 150,000 to 200,000 within the next two years.
Saudi Arabia aims to raise tourism revenue to $85 billion this year, up from approximately $66 billion in 2023, Princess Haifa said in an interview with Bloomberg.
“The current GDP (gross domestic product) contribution is 4.5 percent and we aim to get that to 10 percent by 2030. We started from 3.2 percent when we opened up for tourism,” she said.