Saudi Arabia is set to expand its footprint in global aviation, with the Public Investment Fund (PIF) reportedly considering a stake in Malaysia’s low-cost carrier, AirAsia.

At the same time, the Kingdom is planning a new cargo airline to strengthen its air freight sector, supporting the national carrier, Saudia, and the newly established Riyadh Air.

This initiative aligns with Saudi Vision 2030, which seeks to position the country as a key global logistics hub by enhancing both passenger and cargo operations.

PIF’s Interest in AirAsia

The Public Investment Fund’s potential investment in AirAsia signals confidence in the airline’s financial prospects. Aviation analysts suggest that if the deal proceeds, it could substantially boost AirAsia’s growth trajectory.

According to reports, PIF is expected to invest approximately US$100 million (RM441.3 million) in AirAsia, making it the largest contributor to the airline group’s fundraising efforts, which target around RM1 billion. AirAsia is reportedly offering investors up to a 15% stake at a $2 billion valuation as part of its strategy to recover from pandemic-induced losses.

An official announcement regarding the investment could be made in the coming weeks, though sources caution that a final deal is not yet guaranteed. Representatives from both PIF and AirAsia have declined to comment on the matter.

Aviation economist Mohd Harridon Mohamed Suffian from Universiti Kuala Lumpur’s Malaysian Institute of Aviation Technology believes that PIF’s capital injection would significantly support AirAsia’s financial restructuring efforts.

Following news of PIF’s interest, shares of Capital A rose by 1.8% in Kuala Lumpur on Friday, while AirAsia X saw a surge of 6.5%.

Strategic Shift: Riyadh Air’s Aircraft Swap

In a related development, Riyadh Air—Saudi Arabia’s new flagship airline—has opted to acquire Airbus aircraft slots from AirAsia instead of proceeding with a previously planned order of 100 Boeing 737 jets. This decision grants Riyadh Air quicker access to much-needed aircraft as it gears up for its scheduled launch later this year.

PIF already holds a diverse portfolio of aviation assets, including an aircraft leasing company, a helicopter unit, and investments in space and defense firms. Additionally, the Saudi sovereign wealth fund owns a 15% stake in London’s Heathrow Airport.

AirAsia Eyes Fleet Expansion

With fresh funding, AirAsia is considering an aircraft order of approximately 100 regional jets, evaluating models like the Airbus A220 and Embraer E2. The move aligns with its broader strategy to expand its operations and strengthen its position in the Southeast Asian aviation market.