Saudi Arabia’s sovereign wealth fund is in exploratory talks to line up Boeing Co. and Airbus SE freighters for a new cargo airline, as it looks to turn the kingdom into a logistics hub to rival Dubai and Doha. 

The cargo-hauling operation would serve flag-carrier Saudia and startup Riyadh Air, according to people familiar with the matter, who asked not to be identified as the talks are private. The Public Investment Fund is in discussions with both planemakers and lessors to acquire Boeing 777 and Airbus A350 freighters, the people said.

The talks are at an early stage. No final decisions have been made and the fund may ultimately decide to delay or scrap the plans.

Representatives for the PIF and Riyadh Air declined to comment, while Saudia did not reply to a request for comment. Boeing and Airbus said they do not comment on talks with airlines or potential customers. 

Like its Persian Gulf rivals, Saudi Arabia is looking to take advantage of its location at a global crossroads connecting Europe, Asia and Africa amid booming demand for air freight. Air cargo shipments rose 14% in June from a year earlier, the seventh consecutive month of 10% or greater growth, according to the International Air Transport Association industry group. Shipments are on pace to exceed levels hit in 2021, a record year.

The move is part of a push by Saudi Arabia to diversify its economy away from a reliance on oil sales, with an emphasis on tourism, aviation and logistics. The kingdom has launched an aircraft leasing company, a helicopter firm, invested in Saudia’s engineering unit, and plans to develop one of the world’s biggest airports in its capital.

Riyadh Air, which was set up by the PIF as part of those efforts, is seeking to build its network and challenge regional incumbents Emirates and Qatar Airways. Dubai-based Emirates has 14 freighters in its fleet and plans to more than double that number in the next decade, while Qatar has 28 cargo-hauling jets.

Jeddah-based Saudia, meanwhile, is being repositioned to focus on religious pilgrimages. Its current cargo operation would be included in the new venture, people familiar with the matter said. 

Last year, the two carriers jointly placed an order for 78 Boeing 787 Dreamliners, a deal the White House valued at almost $37 billion. Bloomberg News has reported that Saudia’s ownership could be transferred to the PIF as soon as 2025.