Saudi Low-Cost Carrier Flynas Launches IPO, But Israel-Iran Conflict Weighs on Market

Flynas, Saudi Arabia’s budget carrier, made its IPO debut Wednesday, but growing tensions between Israel and Iran weighed on regional markets and local airline stocks.

Flynas had priced its offering at 80 riyals ($21.38) a share, giving the low-cost airline a valuation of 13.7 billion riyals ($3.7 billion).

The shares initially dropped as much as 13% Wednesday and trading was briefly halted twice within the first 20 minutes of the session. By midday, shares were down but had recovered much of the loss.

"Given how the situation changed this week with escalating geopolitical crisis and closure of air space and regional flight disruption, it may have been prudent to delay the listing until things settled," wrote Nishit Lakhotia, head of research at Bahrain’s Sico Bank, on LinkedIn.

The UAE’s Air Arabia is down more than 3% this week, while Kuwait’s Jazeera Airways tumbled as much as 4.2% on Wednesday, following its worst drop since 2020 earlier in the week.

Despite the dip, the Flynas IPO was the largest in the Middle East so far this year and marked the first Gulf airline to go public in nearly two decades after Air Arabia in 2007.

The total size of the IPO is $1.1 billion, the company said when it announced the IPO price, and proceeds will be used to support fleet expansion, extend its network, and fund general corporate activities.

In February, Flynas announced it would be receiving more than 100 Airbus aircraft over the next five years, with the expected growth of its fleet to more than 160 aircraft by the end of 2030. It has orders for 280 aircraft worth over 161 billion Riyals ($42.9 billion).

In May, Flynas CEO Bander Al-Muhanna said the IPO would be "a strategic step that will accelerate the execution of our growth ambitions and solidify our position as the leading low-cost carrier for short- and medium-haul flights across the Middle East and North Africa by 2030."

Flynas connects more than 70 domestic and international destinations with more than 1,500 weekly flights. For the first nine months of last year, it served 10.9 million passengers, according to its IPO prospectus. The airline aims to reach 165 domestic and international destinations, in line with the country's Vision 2030.

Saudi Arabia will soon have four major airlines: Saudia, Flynas, Flyadeal, and Riyadh Air.

Saudia and Riyadh Air are long-haul national carriers, while Flynas and Flyadeal are budget, short- and medium-haul. Riyadh Air hasn't launched yet, but its first flight is expected by the end of the year and it targets 100 million passengers by 2030.

Saudia had 20 million passengers last year and Flyadeal had 7.9 million.

Currently, the Saudia routes between Riyadh and Dubai are especially popular as business people move between the two cities. During the Skift Travel Podcast, Almosafer CEO Muzzammil Ahussain said: “Given the demand, Riyadh to Dubai is one of the most expensive and profitable routes in the world. Especially the business class, given the amount of trade between the two countries. The business travel going on… It’s sometimes $4,000-$5,000 for a one-hour business class flight.”

He added: “Investments in new airports, new airlines, [demand] is only going to increase.”

Ahussain said he's hoping for an Almosafer IPO in the next 12 to 18 months.

Jet Stream keeps you ahead of the fast-moving world of global airlines.

Get it in your inbox every Saturday.

By submitting this form, you agree to receive email communication from Skift.