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Saudi Arabia's Sama Airlines to ground operations

Low cost carrier makes $266m loss, will stop operations on Tuesday.
NEWS, Aviation

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Sama is planning to suspend its operations after recording a loss of US$266 million, it has been reported.

The airline, which is one of two low cost carriers based in Saudi Arabia, had received a loan of $53 million from the government to cover its fuel costs, in addition to $133 from shareholders.

However, it needed an extra $80 million to keep its operations on track, an anonymous board member told Bloomberg.

“Sama Airlines announced today that it would discontinue all flight operations as of Tuesday 24th August 2010. Flight operations will continue as planned through Monday, 23rd August, and Sama is seeking arrangements to accommodate passengers affected by flight cancellations through arrangements with other airlines,” the airline stated in a press release.

According to Sama’s website, the airline commenced operations in 2007 and served 10 destinations within Saudi Arabia and neighbouring countries using a fleet of six Boeing 737-300s.

It is chaired by Prince Bandar Bin Khaled Bin Faisal and competed with Saudi Arabian Airlines, which receives government support and subsidised fuel, and Riyadh-based National Air Services, the Kingdom’s first low cost carrier to get licensed.

“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,” explained Sama CEO Bruce Ashby.

“We had been awaiting a significant aviation relief package with respect to fuel subsidies, subsidies for PSO routes, a gradual lifting of domestic fare caps, and additional funds to support the past losses and growth of our business. In addition, 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 timeframe."

“Sama, and all other airlines throughout the region, experienced very low fares and somewhat slow demand for regional travel during the winter season (October 2009 through March 2010). Although revenues were up sharply during the summer peak season, it has not been enough to offset the heavy losses we suffered during the winter," he added.

“We deeply regret any inconvenience caused to our customers, but we must do what is necessary to preserve the integrity of our operations. Since January 2009 we have run a safe, reliable airline that flies on time and we have received broad-based support for our plan of measured growth. We remain hopeful that a financial solution will be found that will allow us to restart operations in the coming few days,” Ashby concluded.

Sama will make notifications to all passengers booked on flights from 24th August, 2010 onwards to the status of their itineraries at the contact numbers provided when the booking was made.

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