Saudi Arabia is in advanced negotiations to order nearly 40 A350 aircraft from European company Airbus as part of its strategic efforts to launch a new airline and challenge the big Persian Gulf firms, according to industry sources.
If confirmed, the purchase by the sovereign Public Investment Fund (FIP), worth $12 billion at list prices, could be announced as early as this week, when Riyadh hosts a major forum, the Future Investment Initiative (IIF), the sources said.
It’s unclear whether Boeing will also participate in a major shopping list for the new airline, which will be called RIA, the sources said. A source familiar with the negotiations warned that “it’s not over yet.”
FPI has been negotiating the purchase of about 75 planes and another source said the kingdom was leaning toward the Boeing 787. Reports have said the airline may also need narrow-body aircraft.
Neither Airbus nor Boeing has commented. FPI did not immediately respond to a request for comment.
Any trade deal has yet to win political approval and also depends on complex engine negotiations, one of the sources said.
The choice of supplier is widely seen as a political issue, as the Saudi meeting takes place amid rising tensions between Washington and Riyadh, two industry sources said.
The IIF is a showcase for Crown Prince Mohammed bin Salman’s Vision 2030 plan to decouple the economy from the economy. petroleum by creating new industries that also generate jobs for millions of Saudis, and to attract foreign capital and talent.
U.S. President Joe Biden has promised “consequences” on ties with Saudi Arabia over OPEC+’s decision to cut oil production targets, which Riyadh defended as a service to market stability.
Reuters first reported in August that Saudi Arabia was discussing a major order for widebody aircraft.
Bloomberg News reported Sunday that the deal could include up to 80 planes.
The new airline will be based in the capital, Riyadh, while state-owned airline Saudia will be based in the Red Sea city of Jeddah as part of a transport strategy that envisages the creation of two hubs to rival airlines from the United Arab Emirates and Qatar.