Airbus likely to get a deal of 40 A350s from Saudi Arabia

Saudi Arabia is in advanced negotiations to order almost 40 A350 jets from Airbus as part of a broader, multi-billion-dollar drive to launch a new airline and challenge heavyweight carriers in the Gulf, industry sources said.

A final decision on the proposed deal, worth around USD 12 billion at list prices, depends on political approval at the highest level, with Boeing also lobbying for a slice of the expansion despite a chill in U.S.-Saudi relations.

One source familiar with the negotiation for the new airline, provisionally named “RIA”, cautioned that it was “not over yet”.

Industry sources said Boeing remained confident of winning at least part of a total requirement for around 68-75 jets via its Boeing 787 Dreamliner, already in use at state-owned Saudia.

Also read – Saudi Arabia to launch a new airline RIA soon, eyeing several aircraft

Saudi Arabia, A350, Airbus
Saudi Arabia In Talks For 40 Airbus A350s.

Reports have said that the new airline may also need smaller narrow-body jets. Reuters first reported in August that Saudi Arabia was discussing a significant order for wide-body jets. Bloomberg News reported on Sunday that any deal could involve up to 80 aircraft.

The Future Investment Initiative (FII) is a showcase for Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify from oil by fostering new industries that generate jobs and lure foreign capital.

Saudia has a mixed fleet of Boeing long-haul 787 and 777 jets and Airbus A320-family short- to medium-haul models.

The new airline will be based in the capital Riyadh, while state airline Saudia will be based out of the Red Sea city Jeddah under a transportation strategy that calls for the establishment of two hubs to rival UAE and Qatari carriers.

The potential deal is seen as part of the country’s effort to launch a new airline, RIA, to rival neighbouring countries such as Qatar and the UAE. 

Analysts caution that even with a large investment warchest, it faces a tough challenge to counter the powerful Dubai and Doha aviation hubs of Emirates and Qatar Airways respectively.

“They have established networks and large established fleets and will be a strong competitive force for any new airline.

Getting hold of enough aircraft will be an important issue, as well as coping with shortages of trained pilots.”

James Halstead, managing partner at Aviation Strategy.

With inputs from reuters.