Business | Aviation
Saudi budget carrier Sama grounded
Airline seeks alternative methods to accommodate passengers affected by flight cancellations
- Gulf News Report
- Published: 00:00 August 24, 2010
Dubai: Saudi Arabian budget carrier Sama Airlines has cancelled all flights from Tuesday as it seeks "additional funds" to remain afloat.
"Sama Airlines announced today that it would discontinue all flight operations as of Tuesday," the airline said in a statement after incurring more than a billion Saudi riyals in losses.
Sama chief executive Bruce Ashby said: "The decision to stop flying was not taken lightly, but we have spent many months seeking alternatives, and now this is the only option remaining to us".
Sama is seeking arrangements to accommodate passengers affected by flight cancellations through arrangements with other airlines, the statement said.
A lethal cocktail of fuel subsidies for competitors, domestic fare caps and past losses have affected an airline that was operating in one of the fastest-growing sectors in the region.
"We sought for, and found, more than one potential new equity investor willing to inject cash into the business. Unfortunately, none of these alternatives came together in the required time frame," Ashby said.
The announcement reflects the "harsh realities" of increased competition, falling yields, low fares and high operating costs, an analyst told Gulf News on condition of anonymity.
The fate of Sama's assets, primarily its six Boeing aircraft, is unclear. The airline also has 70 new aircraft on order.
"We remain hopeful that a financial solution will be found that will allow us to restart operations in the coming few days," Ashby said.
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