Saudi Arabia is currently in advanced negotiations to order nearly 40 A350 jets from Europe’s Airbus as part of its strategic efforts to unveil a new airline and challenge heavyweight carriers in the Gulf, industry sources have stated.
If the deal is confirmed, the purchase by the sovereign Public Investment Fund (PIF), worth up to $12 billion at list prices, could be announced later this week when Riyadh hosts a major forum, the Future Investment Initiative (FII), the sources said.
It is still unclear whether Boeing would also seize a portion of the massive shopping list for the new airline, which will be named RIA, as highlighted by the sources. One source that is familiar with the negotiations cautioned that it was ‘not over yet.’
PIF has been negotiating to purchase some 75 jets and another source insisted that the kingdom was leaning toward the Boeing 787. Reports have stated that the airline might also need narrow-body jets.
Neither Boeing nor Airbus had any comment at the time. PIF did not quickly respond to a request for comment. Any commercial deal has to win political approval and depends heavily on complex engine negotiations, as mentioned by another source.
The choice of supplier is majorly seen as politically charged as the Saudi gathering happens amid growing tensions between Washington and Riyadh, two industry sources stated. Notably, the FII is a showcase for Crown Prince Mohammed bin Salman’s Vision 2030 plan to shift the economy away from oil by developing new industries that also generate jobs for millions of Saudis, and attract foreign capital and talent.
US President Joe Biden has vowed severe “consequences” for U.S.-Saudi ties over an OPEC+ decision to cut oil output targets, which Riyadh defended as serving market stability. Reuters first reported in August that Saudi Arabia was discussing a considerable order for wide-body jets.
Bloomberg News reported on October 23 that a deal might involve up to 80 aircraft.
The new airline will get based in the capital Riyadh, while state airline Saudia will be based out of the Red Sea city of Jeddah under a transportation strategy that calls for the establishment of two hubs to rival Qatari and UAE carriers.