In an unprecedented turn for Saudi Arabia’s financial landscape, Riyadh Air, an airline owned by the Public Investment Fund (PIF) under the oversight of Crown Prince Mohammed bin Salman, has borrowed $1.3 billion from Gulf banks due to mounting losses. This significant financial strain has raised questions about the Crown Prince’s broader economic strategy and the sustainability of PIF-owned entities, especially as this borrowing comes at a time when Saudi public finances are under intense pressure.
Struggling Airline Ventures and Unfulfilled Promises
When Riyadh Air was established, it was envisioned as a competitive force in regional and international travel, set to rival giants such as Emirates and Qatar Airways. However, despite heavy investments, including the purchase of 60 narrow-body aircraft from Airbus, the airline has failed to make an impact. The payment delays to Airbus, which halted production for Riyadh Air, exemplify the financial difficulties the company faces.
Analysts point out that bin Salman’s allocation of funds from Riyadh Air to entertainment projects has contributed to these financial woes, undermining the company’s ability to achieve profitability. This strategy, critics argue, reflects a broader issue within the Crown Prince’s financial governance—prioritizing prestige and spectacle over sustainable economic growth.
Extravagant Spending Amid Economic Warnings
In addition to the airline’s struggles, bin Salman has faced criticism for pouring hundreds of millions of dollars into high-profile sponsorships. A recent example is the 300 million euro deal to rename Atlético Madrid’s stadium Riyadh Air Metropolitano, making it the most lucrative stadium sponsorship in the club’s history. Riyadh Air is also the main jersey sponsor for Atlético Madrid, in a contract worth around 40 million euros annually until 2027.
These expenditures come at a time when Saudi Arabia faces budget deficits severe enough to prompt the sale of public assets. Reports indicate that the government plans to sell over 1,000 hospital beds, 200 pharmacies, and more than 20 medical centers in the next 3 to 5 years. Earlier this year, a hospital sale netted $763 million, revealing the government’s dire financial position and raising questions about where public funds are being channeled.
Losses Beyond Riyadh Air: PIF-Owned Companies in Trouble
The challenges are not limited to Riyadh Air. Other PIF-owned entities, such as The Helicopter Company, which was established as Saudi Arabia’s first commercial helicopter operator, have also faced financial setbacks. The company recently borrowed $213 million from Gulf International Bank due to significant operational costs and declining demand. High prices and safety concerns have led to a reluctance among both local and international business travelers to use helicopter services, further exacerbating the company’s losses.
Social Impact and Public Outcry
Critics argue that bin Salman’s financial decisions are disconnected from the real needs of Saudi citizens. While he spends billions on high-profile entertainment and sports sponsorships that elevate the kingdom’s international image, ordinary Saudis face the harsh realities of rising living costs, inflation, and unemployment. The sale of public hospitals and other healthcare facilities is seen as a stark reminder of the government’s shifting priorities, which many say favor spectacle over substance.
The narrative of massive investments in entertainment, including sports sponsorships and luxury projects, juxtaposed with the sale of essential public assets, has raised questions about whether the current economic path truly serves the interests of the Saudi people. The PIF’s financial challenges highlight the need for more balanced and sustainable investment strategies.
