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Just In: Sama To Cease Operations  
User currently offlineHiJazzey From Saudi Arabia, joined Sep 2005, 864 posts, RR: 1
Posted (3 years 11 months 2 weeks 1 day 9 hours ago) and read 7850 times:

According to bloomberg, Sama will cease operations from today.

Saudi Low-Cost Airline Sama to Cease Operations After $266 Million Loss

Sama, one of two low-cost airlines in Saudi Arabia, plans to stop its services from today, a spokesman for the country’s civil aviation regulator said.

The General Authority of Civil Aviation has been informed by Sama of its plan, Khalid al-Khaybari said in a phone interview today. The decision was taken after the airline recorded a loss of 1 billion riyals ($266 million), said a board member, who declined to be identified as the company hasn’t made any official announcement.
...

http://www.bloomberg.com/news/2010-0...ations-after-266-million-loss.html

Not a surprise really, since they looked on the brink for a while now. The shareholders have had enough and pulled the plug.
I hope someone else can take over the DMM based AOC.

18 replies: All unread, jump to last
 
User currently offlineabrelosojos From Venezuela, joined May 2005, 5076 posts, RR: 55
Reply 1, posted (3 years 11 months 2 weeks 1 day 9 hours ago) and read 7796 times:

First big GCC failure ... inventory has been zeroed out.

Saludos,
A.



Live, and let live.
User currently offlineTobias2702 From Germany, joined Sep 2008, 719 posts, RR: 0
Reply 2, posted (3 years 11 months 2 weeks 1 day 8 hours ago) and read 7621 times:

How came that Sama had such huge losses? Can't Saudi Arabia sustain a low-cost carrier?

Quoting abrelosojos (Reply 1):
First big GCC failure ... inventory has been zeroed out.

Excuse my ignorance, but what does GCC mean?

--Tobias--

[Edited 2010-08-22 09:07:54]


PA, AF, UK, BA, AB, DL, LH, FR, BD, A3, EZY, DY //// A319/320/346, B733/735/73G/738/744/763, AT4, 146, CR2, DH4
User currently offlineBlueFlyer From United States of America, joined Jan 2006, 3945 posts, RR: 2
Reply 3, posted (3 years 11 months 2 weeks 1 day 8 hours ago) and read 7564 times:
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I see inventory for Monday and everything zeroed past after. I guess Monday is the last hurray.

Quoting Tobias2702 (Reply 2):
but what does GCC mean?

Gulf Cooperation Council. Kuwait, UAE, Oman, Qatar, Saudi Arabia, Bahrain



I've got $h*t to do
User currently offlineN809FR From United States of America, joined Aug 2010, 182 posts, RR: 2
Reply 4, posted (3 years 11 months 2 weeks 1 day 8 hours ago) and read 7474 times:

How are the other "newer" airlines doing in the Gulf? Hopefully this isn't a sign of how the other new entrants to this market are doing.

User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17369 posts, RR: 46
Reply 5, posted (3 years 11 months 2 weeks 1 day 7 hours ago) and read 7454 times:

Quoting N809FR (Reply 4):
How are the other "newer" airlines doing in the Gulf? Hopefully this isn't a sign of how the other new entrants to this market are doing.

I think most of them are doing the same



E pur si muove -Galileo
User currently offlineEkA380 From Egypt, joined Aug 2008, 120 posts, RR: 7
Reply 6, posted (3 years 11 months 2 weeks 1 day 7 hours ago) and read 7374 times:

Quoting N809FR (Reply 4):
How are the other "newer" airlines doing in the Gulf?

Well here in the United Arab Emirates we have two LLC's Air Arabia and FlyDubai . I am not sure about the latter but Air Arabia is doing very well and their CEO is very satisfied with the progress the airline is making , they recently also opened along with investors Air Arabia Maroc and Air Arabia Egypt . Their network is quite extensive for a 5 yo airline and they are always looking for new developments . Sama's situation was always unstable so it wasn't unexpected .

Cheers
Islam Darwish



Always go the extra mile , its worth it ;)
User currently offlineLAXintl From United States of America, joined May 2000, 24904 posts, RR: 46
Reply 7, posted (3 years 11 months 2 weeks 1 day 7 hours ago) and read 7361 times:

$266mil loss. No surprise.

Sama chances of success were slim from the first day. The carrier really never had the opportunity to operate as it wished.

For start-up the carrier was restricted to domestic ops only, on city the pairs the government authorized and was required to operate several loss making "social" routes instead of focusing on popular trunk routes. Also there was the limited opportunity for fare competition as pricing levels(which were low to begin with) in the Kingdom had to be approved by the government. Then comes in the handicap that Saudia enjoys huge discounts in airport facility charges and fuel purchasing to a tune of sometimes only paying 10% of the market price.
Lastly, I would never call Sama a LCC. Maybe a "budget" airline instead. They were more a hybrid with not the typical LCC traits such as low cost distribution, or high frequency flying, but instead had rather low utilization and many routes including domestic ones were less then daily while they had physical ticket offices set up all around the country as well.

Here is a recent article about the difficulty these Saudi carriers were experiencing.
http://arabnews.com/saudiarabia/article95083.ece



From the desert to the sea, to all of Southern California
User currently offlineabrelosojos From Venezuela, joined May 2005, 5076 posts, RR: 55
Reply 8, posted (3 years 11 months 2 weeks 1 day 7 hours ago) and read 7312 times:

Quoting LAXintl (Reply 7):
Sama chances of success were slim from the first day. The carrier really never had the opportunity to operate as it wished.

For start-up the carrier was restricted to domestic ops only, on city the pairs the government authorized and was required to operate several loss making "social" routes instead of focusing on popular trunk routes. Also there was the limited opportunity for fare competition as pricing levels(which were low to begin with) in the Kingdom had to be approved by the government. Then comes in the handicap that Saudia enjoys huge discounts in airport facility charges and fuel purchasing to a tune of sometimes only paying 10% of the market price.
Lastly, I would never call Sama a LCC. Maybe a "budget" airline instead. They were more a hybrid with not the typical LCC traits such as low cost distribution, or high frequency flying, but instead had rather low utilization and many routes including domestic ones were less then daily while they had physical ticket offices set up all around the country as well.

= Absolutely excellent summary.

Saludos,
A.



Live, and let live.
User currently offlineRJAF From Jordan, joined Jan 2007, 314 posts, RR: 0
Reply 9, posted (3 years 11 months 2 weeks 1 day 6 hours ago) and read 7157 times:

Saw this one coming. I heard that their hajj performance last year was horrible with aircraft not showing up etc...and deposit monies from lessees being used to pay off immediate debts. Always sad to see an airline ceasing operation.


Chance favors the prepared mind
User currently offlineHiJazzey From Saudi Arabia, joined Sep 2005, 864 posts, RR: 1
Reply 10, posted (3 years 11 months 2 weeks 1 day 5 hours ago) and read 7116 times:

Hi LAXintl,

Nice post, but not completely accurate. The government relented long ago. Both LCCs fly international routes, and SV has had to reinstate PSO routes. And they don't have fixed domestic fares like SV either.

While the environment is challenging, Sama failed IMO mainly for two reasons: 1. Poor management: Their initial setup was fine but they never managed to develop their network. 2. Funding: they didn't have deep pockets to invest in planes and open new stations properly. The comparison with NAS is telling.


User currently offlineLAXintl From United States of America, joined May 2000, 24904 posts, RR: 46
Reply 11, posted (3 years 11 months 2 weeks 1 day 4 hours ago) and read 6931 times:

Quoting HiJazzey (Reply 10):
Nice post, but not completely accurate. The government relented long ago. Both LCCs fly international routes, and SV has had to reinstate PSO routes. And they don't have fixed domestic fares like SV either.

If you re-read my post I said "for start-up".

Having its hands tied partially behind its back since day one was not a good omen to begin the venture.



From the desert to the sea, to all of Southern California
User currently offlineHiJazzey From Saudi Arabia, joined Sep 2005, 864 posts, RR: 1
Reply 12, posted (3 years 11 months 2 weeks 1 day 4 hours ago) and read 6842 times:

My apologies, I thought you meant "for starters"

User currently offlineromeokc10fe From United States of America, joined Jul 2004, 219 posts, RR: 0
Reply 13, posted (3 years 11 months 2 weeks 23 hours ago) and read 5233 times:

Never heard of them.  

User currently offlineCamiloA380 From Sweden, joined Feb 2008, 486 posts, RR: 25
Reply 14, posted (3 years 11 months 2 weeks 11 hours ago) and read 3225 times:

They had quite a network though.

4 weekly Dammam – Jeddah
2 Daily Dammam – Riyadh
4 weekly Jeddah – Aleppo
3 weekly Jeddah – Assiut
1 Daily Jeddah – Borg el Arab/Alexandria
1 Daily Jeddah – Damascus
3 weekly Jeddah – Khartoum
1 Daily Jeddah – Riyadh
4 weekly Jeddah – Sharjah
4 weekly Riyadh – Aleppo
3 weekly Riyadh – Amman
4 weekly Riyadh – Borg el Arab/Alexandria
4 weekly Riyadh – Damascus

Camilo   



Flying4Ever!
User currently offlineSurfandSnow From United States of America, joined Jan 2009, 2858 posts, RR: 30
Reply 15, posted (3 years 11 months 1 week 6 days 18 hours ago) and read 2516 times:

Quoting HiJazzey (Thread starter):
one of two low-cost airlines in Saudi Arabia

There's your problem right there. Saudi Arabia, a country that only had ONE airline until 2007, couldn't have been expected to support TWO upstarts, especially not during an unprecedented global crisis that saw oil prices plummet.

Remember, countries like Saudi Arabia ride high when oil prices go up, and face extremely tough times when they crash. Saudi Arabia faced a double-whammy: severe economic recession just like every other country in the globalized world, but also a sharp downfall in oil revenues that fund a HUGE fraction of the entire gov't revenues/state budget.

Quoting abrelosojos (Reply 1):
First big GCC failure

Saudi Arabia is a bit hard to compare to other GCC nations because it remains such a "closed" country that is virtually off-limits to non-Muslims. All of the other countries actively promote themselves as tourist destinations and major transit hubs. Saudi airlines don't see too many Americans bound for India or Australians bound for Europe. Just O&D traffic.

Quoting Tobias2702 (Reply 2):
Can't Saudi Arabia sustain a low-cost carrier?

It can! The name of it is Nas Air.

Quoting N809FR (Reply 4):
How are the other "newer" airlines doing in the Gulf? Hopefully this isn't a sign of how the other new entrants to this market are doing.

It's a mixed bag. All of the Middle Eastern LCCs are quite new, ~mid-2000s or so. Some like Air Arabia and Fly Dubai seem to be doing pretty well, while others like Jazeera seem to be doing just awful.

Quoting CamiloA380 (Reply 14):
They had quite a network though.
Quoting CamiloA380 (Reply 14):

4 weekly Dammam – Jeddah
Quoting CamiloA380 (Reply 14):
1 Daily Jeddah – Riyadh

You yourself point out that this was certainly not the case! 4 weekly flights between the country's oil hub and commercial hub??? No business travelers would ever be attracted to such a paltry schedule.



Flying in the middle seat of coach is much better than not flying at all!
User currently offlineEkA380 From Egypt, joined Aug 2008, 120 posts, RR: 7
Reply 16, posted (3 years 11 months 1 week 5 days 5 hours ago) and read 2278 times:

Here is an update , not very promising but we should wait and see

"Sama airlines in efforts to resume operations"

http://gulfnews.com/business/aviatio...orts-to-resume-operations-1.673023

Cheers
Islam Darwish



Always go the extra mile , its worth it ;)
User currently offlinefpetrutiu From United States of America, joined Aug 2007, 881 posts, RR: 0
Reply 17, posted (3 years 11 months 1 week 5 days 5 hours ago) and read 2258 times:

They had an interesting paint scheme. Shame that another bit the dust.



User currently offlineHiJazzey From Saudi Arabia, joined Sep 2005, 864 posts, RR: 1
Reply 18, posted (3 years 11 months 1 week 4 days 22 hours ago) and read 2138 times:

Quoting EkA380 (Reply 16):
"Sama airlines in efforts to resume operations"

http://gulfnews.com/business/aviatio...73023

They are delusional if they think that this is a temporary situation. They're dead in the water, they're just stalling for time to get bought out or get a handout from the government (or both). You don't suspend operations to preserve cash, you'll just drain your reserves quicker. A massive chunk of your costs remain, all while you've lost your revenues.

It would be interesting if Air Arabia do try to buy them out. It would make a lot of sense for them. Gives them access to a major market. I wonder if the government would accept their involvement as part of a JV (like in Egypt).


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