Sama boosts financing to fight soaring fuel price

FURTHER FINANCING: Saudi Arabian budget carrier Sama Airlines has approved a further $53.3 million in financing. (Supplied)

The shareholders of Saudi Arabian budget carrier Sama Airlines have voted to strengthen the company’s financial position with a further $53.3 million in financing, in part to offset the effect of soaring fuel costs.

“Sama’s challenge remains the fact that the combination of domestic fare cap plus escalating oil prices, means that domestic flights are chronically unprofitable,” Sama CEO Andrew Cowen said in a statement on Saturday.

“During June 2008 for example, Sama will be paying the equivalent of $178 per barrel for aviation fuel, yet the domestic economy fare cap has been unchanged for the last eight or nine years.”

Sama flies to 12 domestic locations and on 10 international routes, including the UAE, Lebanon and Egypt.

The carrier currently flies six Boeing 737-300 aircraft as well as a Jetstream, and has announced plans to expand its fleet to as many as 35 aircraft by 2010.

Sama was founded in 2005 by Investment Enterprises Ltd, chaired by HRH Prince Bandar bin Khalid Al-Faisal, with 30 major Saudi private and institutional investors.

The new injection is in addition to the $80 million invested at start-up.

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