Aramco: The state-owned Saudi company had a record-breaking year

3/12/23 8:00PM

Yesterday, Saudi Aramco announced record profits of $161bn for 2022, up 46% on the year prior.

That's the best year on record for the oil giant, which is ~95% state-owned, and the company remains second only to Apple on the list of the world's most valuable companies with a market cap of $1.9 trillion. Despite pressure to fund green projects, Aramco is planning to spend $45-55bn on capital expenditures this year, having warned of “persistent underinvestment” in the oil and gas sector.

‍Shopping spree

‍Aramco’s CEO, Amin Nasser, said that “this is probably the highest net income ever recorded in the corporate world”.

It’s hard to wrap your head around what one billion can buy, let alone $161bn, but one exercise to give context is to think about the companies Aramco could (very theoretically) acquire. A combination of 10 that we came up with was: Campbell's, Coinbase, Etsy, eBay, Kellogg’s, Crocs, Zoom, Snap, Pinterest and Ralph Lauren. At current market prices that shopping list would come to ~$153bn, leaving Saudi Aramco with some change left over (remember this is just one year's profit).

Aramco’s record year is also good news for the Public Investment Fund (PIF) — Saudi Arabia's sovereign wealth fund, which is investing heavily to try and diversify the national portfolio away from oil. The most high-profile investments have come in the world of sport, with PIF funding the breakaway LIV Golf tour, purchasing Premier League soccer club Newcastle United and signing various deals in the world of Formula One.

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American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

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The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

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Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.