PARIS/DUBAI (Reuters) – Saudi Arabia is in advanced negotiations to order almost 40 A350 jets from Europe’s Airbus as part of strategic efforts to launch a new airline and challenge heavyweight carriers in the Gulf, industry sources said.
If confirmed, the purchase by the sovereign Public Investment Fund (PIF), worth $12 billion at list prices, could be announced as early as this week when Riyadh hosts a major forum, the Future Investment Initiative (FII), the sources said.
It remained unclear whether Boeing would also seize part of a substantial shopping list for the new airline, which will be named RIA, the sources said. One source familiar with the negotiations cautioned that it was “not over yet.”
PIF has been negotiating to buy some 75 jets and another source said the kingdom was leaning toward the Boeing 787. Reports have said that the airline may also need narrow-body jets.
Neither Airbus nor Boeing had any comment. PIF did not immediately respond to a request for comment.
Any commercial deal must still win political approval and also depends n complex engine negotiations, one of the sources said.
The choice of supplier is widely seen as politically charged as the Saudi gathering takes place amid deepening tensions between Washington and Riyadh, two industry sources said.
The FII is a showcase for Crown Prince Mohammed bin Salman’s Vision 2030 plan to wean the economy off oil by creating new industries that also generate jobs for millions of Saudis, and to lure foreign capital and talent.
U.S. President Joe Biden has vowed “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 significant order for wide-body jets.
Bloomberg News reported on Sunday that a deal could involve up to 80 aircraft.
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.
(Reporting by Tim Hepher and Yousef Saba; Editing by Mark Porter)
