Saudi Arabia’s sovereign wealth fund, valued at $925 billion, is in negotiations to buy the Saudia airline, according to information from Bloomberg. The proposal is to transfer ownership of the airline from the government to the Public Investment Fund (PIF), in an attempt to increase profitability and optimize operational efficiency. Furthermore, the fund would invest billions of dollars in the airline.
Negotiations are in the early stages and there is no guarantee that a deal will be agreed, the report noted. About 30% of its fleet is leased from the International Airfinance Corporation. This leasing company recently attempted to terminate the leases and now faces proceedings against the airline in British courts.
Last year, Saudia CEO Ibrahim Koshy was optimistic that the often loss-making airline would return to profit.
The PIF is among the largest sovereign wealth funds in the world and invests on behalf of the Saudi government. He is playing a key role in the kingdom’s Vision 2030 strategy, an economic transformation plan that includes turning Saudi Arabia into an aviation and tourism hub.
As part of Vision 2030, the fund is creating Riyadh Air, a startup that plans to begin operations in 2025 and has already placed a firm order for the acquisition of thirty-nine Boeing 787-9s. Bloomberg suggested that the PIF may seek to restructure Saudia before seeking to sell it or merge it with Riyadh Air.
When Saudi Arabia’s Crown Prince Mohammed bin Salman formally announced the creation of Riyadh Air last year, he said it was important to build a more financially sustainable aviation industry in the country. Last November, Saudia and Riyadh Air signed a memorandum of understanding as part of a strategic cooperation that will allow the two state-backed airlines to “work side by side”.
In addition to Riyadh Air, PIF’s other aerospace ventures include Saudi Arabian Military Industries (SAMI), Helicopter Company (THC) and aircraft leasing company AviLease.
The latter entity rose to prominence in 2023 when it purchased the aircraft leasing division of Standard Chartered, acquiring 167 aircraft placed with more than 40 airlines. Last year, there were also reports that the PIF was negotiating to buy a stake in flynas. The sovereign wealth fund recorded a loss of 11 billion dollars in its investment activities in the year 2022.
Neither Saudia nor the Public Investment Fund responded to a request for comment.
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