Saudi Arabia is reportedly looking to invest in a large aircraft order for its proposed second national airline. According to recent reports, the Gulf nation could order as many as 40 Airbus A350 airplanes, but many believe that Boeing is not entirely out of the picture yet. It is possible that Saudi Arabia could make an announcement regarding the order later this week.
Saudi Arabia is said to be in advanced negotiations for a huge aircraft order. According to a report by Reuters, the Gulf nation could order as many as 40 Airbus A350 aircraft valued at around $12 billion at list prices.
Riyadh will host the Future Investment Initiative (FII) forum later this week, and it is believed that an announcement could be made at the event.
The purchase will be made by the sovereign Public Investment Fund (PIF) and would kickstart operations of Saudi Arabia’s second state-owned airline to compete with other established Gulf carriers.
Battle for orders
People familiar with the matter told Reuters that it is not entirely over for Boeing and that it’s still anybody’s game. Some sources have even said that the country is in favor of Boeing 787 jets, but nothing has been confirmed so far. Boeing and Airbus have not released any statements regarding such developments.
Bloomberg reports that the deal for the new airline could include an option of buying 40 more airplanes, potentially taking the entire order to up to 80 aircraft. Narrowbody jets are also being considered alongside widebody planes, pitting Boeing’s 737 MAX series against Airbus’ A320neo family.
Reports of Saudi Arabia’s discussions for a new aircraft order have been doing the rounds for some time now. But considering the present global political climate, many also believe that international relations and politics could influence the outcome of this order. With ties between Saudi Arabia and the US under stress lately, it remains to be seen if this could affect the PIF’s eventual decision.
It is also unclear at the moment whether the Gulf nation would go for a mixed fleet of Boeing and Airbus or stick with just one manufacturer. Any such deal will also involve negotiations with engine makers, which in itself is a complex process.
In an attempt to diversify its economy and become less dependent on oil, and as part of its “Vision 2030,” Saudi Arabia is in the process of starting a new airline with the target of attracting 30 million international transit passengers by the end of the decade.
The carrier will be called RIA and will be based out of Riyadh’s King Khalid International Airport (RUH). Together with Saudia, the kingdom hopes to establish two world-class hub airlines that will compete with the big ME3 airlines of its neighboring countries.
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Source: Reuters, Bloomberg