Sama to cease operations on 24-Aug-2010
Sama CEO, Bruce Ashby, confirmed (22-Aug-2010) the Saudi Arabian LCC will cease operations from 24-Aug-2010 until further notice, as the company failed to receive government support and efforts to find strategic investors to invest in the company failed. The decision was taken after the airline recorded a loss of SAR1 billion (USD266 million), as the carrier suffered from heavy losses between Oct-2009 and Mar-2010, due to declining airfares and reduced passenger demand (Bloomberg/AP/Arab News, 23-Aug-2010). It has been reported that Sama, which received SAR200 million as a loan from the government to cover fuel costs and SAR500 million from shareholders, fell short by SAR300 million to keep the operations on track. Sama has informed the General Authority of Civil Aviation of its plan. [more]
Sama: "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. 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. 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,” Bruce Ashby, CEO. Source: Company Statement, 22-Aug-2010.