The Government of Saudi Arabia funnelled at least USD7 billion into state-owned flag carrier Saudia (SV, Jeddah International) in 2019 and 2020, as direct payments and other financial support, according to company documents reviewed by Reuters news agency.
Labelled as “government compensation” such as payments for services, the Ministry of Finance-approved payments include SAR13.6 billion riyals (USD3.63 billion) in 2019 and SAR6.4 billion (USD1.71 billion) in the first half of 2020.
The ministry also accepted a SAR5.3 billion (USD1.41 billion) loan to Saudia from the Public Investment Fund (PIF), a sovereign wealth fund, and converted it into an “equity contribution”, the documents showed.
Asked to comment on the sums, the airline and the ministry said that government compensation can cover a wide range of receivables and services provided, including mandatory flight routes.
Saudi Arabia recently resumed international flights around the world following a lengthy Covid-related lockdown. According to the ch-aviation capacities module, it was operating 2,032 frequencies as of the last week of November, connecting 63 destinations, 26 of them within Saudi Arabia. The rest include cities in the Middle East, Europe, Africa, Asia, and the United States.
As previously reported, Saudia is currently reviewing some of its lease contracts, including a deal for 50 Airbus aircraft - twenty A330-300Regionals and thirty A320-200s - from Dubai-based, International Airfinance-managed Alif Segregated Portfolio Company. Consequently, the lessor is seeking at least USD460 million in unpaid leasing and maintenance costs.
An unnamed source told the news agency that this contract review at Saudia is aimed at cleaning up Saudia’s balance sheet before the PIF takes control of the carrier to turn around the business. But another source said there was “no reason to believe such a move by PIF is imminent”.
