Troubled low-cost Saudi carrier Sama on Saturday told its staff that most of them will have to be laid off immediately after talks with the government failed to yield a commitment to support the loss-making company.

The private firm suspended all operations on Tuesday after it failed to obtain financing from investors or government support to cushion accumulated losses close to $300 million, a company source told Reuters.   

Sama chief executive Bruce Ashby sent a circular dated Saturday to airline staff saying "discussions with various government agencies about the status of Sama" since last week were continuing in order to "obtain additional funding".

 "Unfortunately, until now no firm commitment has been made. Practically speaking, this means that we will not be able to restart operations quickly. Instead, we are facing a longer-term reorganisation," Ashby said in a circular seen by Reuters.

"We also will need to reduce our workforce. Most of our employees will be released from duty today, 28 August 2010. We will ask certain employees to stay on for a longer period in order to help shut down operations, organise administrative matters, and continue to move our customers to other airlines," he added.   

Sama has 600 full-time employees, a company source said. The airline was one of three private low-cost carriers Saudi aviation authorities have licensed to compete with national carrier Saudi Arabian Airlines.    

But the firms have been complaining they were not on an equal footing with the state-owned carrier especially in the cost of fuel which the latter obtains at subsidised prices.   

Sama has been flying to destinations in Saudi Arabia, Egypt, the United Arab Emirates, Jordan, Syria and Sudan, with 164 weekly flights using six Boeing 737-300 aircraft, according to its website.

Founded in 2005, it started commercial flights in 2007. According to its website, among Sama's 30 shareholders are Olayan Financial Co and Xenel Industries Ltd.  - Reuters