Mohammed Bin Salman-Led PIF Eyes Acquisition Of National Airline Saudia To Shift Kingdom's Economy From Oil Dependency And Boost Tourism: Report

In a strategic move that could reshape the aviation landscape of the Middle East, Saudi Arabia’s sovereign wealth fund, led by Crown Prince Mohammed bin Salman is reportedly in talks to acquire the kingdom’s national airline, Saudia.

What Happened: The Public Investment Fund (PIF), with a hefty $925 billion in assets, is considering the purchase of Saudia, Bloomberg reported on Monday. This step is in line with the PIF’s objectives to boost tourism and shift the Saudi economy away from its traditional reliance on oil.

The discussions are still at an early stage, but they could see the PIF take over Saudia from the Saudi government. This could potentially improve the airline’s profitability and efficiency, possibly leading to its privatization or a merger with the newly established PIF-owned Riyadh Air.

Founded in 1945, Saudia boasts a fleet of 144 aircraft and flies to more than 100 destinations. The financial details of the deal are not yet public, and there is a chance that the negotiations could be delayed or called off.

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Why It Matters: The PIF has been actively seeking ways to finance a trillion-dollar economic transformation project. The fund is exploring increased bond sales and IPOs, with its cash reserves at their lowest since 2020.

This move comes against the backdrop of financial strains caused by ambitious development projects, including a $500 billion city and a $48 billion property development. These initiatives have significantly drained the PIF’s coffers, prompting the kingdom to consider unprecedented borrowing and the sale of additional shares in Saudi Aramco.

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