Saudi Arabia's USD925 billion sovereign wealth fund is in talks to buy Saudia (SV, Jeddah International), according to Bloomberg. Under the proposal, ownership of the airline would switch from the government to the Public Investment Fund (PIF) in a bid to improve profitability and operational efficiencies. The fund would also invest billions of dollars in the carrier.

The talks are in their early stages and there is no guarantee a deal will emerge, the report noted. According to ch-aviation PRO airlines data, Saudia operates a fleet of 162 aircraft to 105 destinations in 44 countries. Around 30% of its fleet is supplied on lease from International Airfinance Corporation. The lessor has recently attempted to terminate the leases and is now involved in litigation against the carrier in the UK courts. Last year, Saudia CEO Ibrahim Koshy was bullish the consistently loss-making carrier would return to profit.

The PIF is among the world's largest sovereign wealth funds and invests on behalf of the Saudi government. It is playing a key role in the kingdom's Vision 2030 strategy, an economic transformation scheme that includes turning Saudi Arabia into an aviation and tourism hub.

As part of Vision 2030, the fund is establishing Riyadh Air (RXI, Riyadh), a start-up that is targeting a 2025 launch and has placed a firm order for thirty-nine B787-9s. Bloomberg suggested that the PIF may seek to overhaul Saudia before attempting 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 alongside each other."

In addition to Riyadh Air, the PIF's other aerospace ventures include Saudi Arabian Military Industries (SAMI), the Helicopter Company (THC), and aircraft leasing business AviLease. The latter entity leapt to prominence in 2023 when it purchased Standard Chartered's aircraft leasing arm, picking up 167 aircraft placed at over 40 airlines. There were also reports last year that the PIF was negotiating buying a stake in flynas (XY, Riyadh). The sovereign wealth fund reported a USD11 billion loss on its investment activities in calendar 2022.

Neither Saudia nor the Public Investment Fund responded to a request for comment.