Saudi Arabia’s Public Investment Fund signed an agreement to invest in aviation services company Saudia Technic, a subsidiary of aviation major Saudia Group, as the kingdom seeks to boost non-oil income and diversify its economy away from hydrocarbons.
Saudia Technic, formerly known as Saudia Aerospace Engineering Industries, provides services across aviation maintenance, repair and overhaul segments (MRO), including line, base, components and engines, according to a statement from the PIF on Friday.
The PIF and Saudia Group will transform Saudia Technic into a “national MRO champion” by investing in infrastructure, improving efficiency and capturing market growth in Saudi Arabia over the next decade, the statement added.
The value of the investment was not disclosed.
“The investment in Saudia Technic is a significant milestone as we unlock capabilities, localise expertise and create a first-class, world-leading aviation sector in Saudi Arabia,” Raid Ismail, co-head of Middle East and North Africa direct investments at PIF, said.
Saudi Arabia, the Arab world’s largest economy, aims to diversify its economy away from oil as part of its Vision 2030 initiative.
Its PIF is one of the world’s largest sovereign wealth funds, with about $620 billion in assets under management.
The deal is in line with the PIF’s wider strategy to develop 13 sectors as part of the kingdom’s diversification strategy.
The fund has been involved in a broad range of projects in sectors including aviation, tourism, sports, gaming, camel milk, pharmaceuticals and cars.
Saudia Technic’s ambition is to become the “MRO of choice” for domestic airlines and global partners seeking access to the Saudi market, the PIF said.
The investment will support the development of an approximately 1 million square metre MRO village in Jeddah, including a jet propulsion centre, it added.
The new MRO village will increase hangar capacity and the number of component shops.
It will include the construction and operationalisation of an engine test cell that will serve next generation wide-body and narrow-body aircraft engines, according to the wealth fund.
“Together with the PIF, we aim to enhance our capabilities, drive innovation and become the MRO of choice for airlines and partners worldwide,” Fahd Cynndy, chief executive of Saudia Technic, said.
Saudi Arabia is seeking to attract more tourists and develop its aviation sector, increasing its contribution to non-oil gross domestic product.
The Saudi Aviation Strategy calls for measures to triple annual passenger traffic to 330 million by 2030 and boost the number of destinations to 250, from 99 at present.
This strategy is backed by $100 billion in government and private sector investment.
The PIF has already made significant investments in the aviation sector. These include plans for King Salman International Airport in Riyadh, which is intended to have capacity for 120 million travellers by 2030.
Other initiatives include the launch of the Helicopter Company, which was created to improve local connectivity, and AviLease, an aircraft leasing company, the PIF said.
Updated: December 23, 2023, 8:29 AM
