Saudi Arabia wants to become ‘a global aviation hub’

(New York) Saudi Arabia’s two airlines, Saudia and fledgling Riyadh Air, each ordered 39 long-haul 787 Dreamliners from Boeing on Tuesday, and put options on 43 more, in a bid to make the country a hub. major source of air traffic in the Gulf.

Including the options, this is the fifth largest order in value ever recorded for Boeing, which however did not wish to specify the amount. According to the White House, it totals $37 billion.

The oil monarchy, as part of the reform program of its crown prince, Mohammed bin Salman, aims by 2030 to transport, via these two companies, 330 million passengers per year. And thus better compete with the other major airports in the Gulf, in Dubai, Doha and Abu Dhabi.

To this end, the country announced on Sunday the creation of a second company, Riyadh Air, owned by the kingdom’s sovereign fund, PIF, and based in Riyadh, where a new airport is being built.

The firm order for 39 aircraft and the option for an additional 33 aircraft, “clearly signals that Saudi Arabia intends to become a global aviation hub,” PIF said in a statement.

The boss of Riyadh Air and former director of the Emirati company Etihad Airways, Tony Douglas, noted in an interview with CNBC that “the ambition of the kingdom [was] enormous”, the company having the objective of serving 100 destinations in 2030.

“For the avoidance of doubt, there will be further orders,” he added.

The existing company Saudia, which according to its website currently operates 93 Airbus planes and 51 Boeing planes, hopes, by expanding its fleet, to expand its network. It is based in the coastal city of Jeddah, which hosts millions of Muslims making pilgrimages to Mecca each year.

In a regional market generally considered “saturated” by analysts, Saudi carriers have the advantage, compared to their competitors Emirates, Etihad or Qatar Airways, of being able to count on a domestic market of around 35 million inhabitants.

The White House welcomed the agreement, finalized “after years of discussions, and intense negotiations over the past few months.” US officials intervened, US Secretary of State Antony Blinken said in a separate statement.

Relations between Washington and Riyadh have been strained at times lately, including in October when US President Joe Biden promised “consequences” after Saudi Arabia’s decision to cut oil production.

It’s been an 80-year “strategic partnership” between the two countries, and it’s been punctuated with “ups and downs,” said John Kirby, spokesman for the White House National Security Council, during a briefing. a press briefing. The administration ensures that it is “in the security interest” of the United States, he added.

This “sustainable” partnership involves “cooperation in different areas, such as transport”, noted the Saudi ambassador to Washington, Princess Reema Bandar Al-Saud, welcoming an agreement symbolizing “the solidity of the ties trade” between the two countries.

Boeing boss Dave Calouhn assured CNBC that the manufacturer, which is currently struggling to ramp up due to suppliers still affected by the consequences of the pandemic, would be able to meet the order.

“The situation is improving” and “we are confident […] that we will be able to reach the production rates” that the group set for itself at the end of 2022, namely the construction of 10 787 aircraft per month by 2025 or 2026 , he said.

The manufacturer, however, did not specify when the planes are expected to be delivered.

He also did not indicate how the orders were divided between the 787-9 and the 787-10 versions. These models are respectively sold at 292 million dollars and 338 million per unit according to the last catalog prices transmitted by Boeing in 2019, which are however never applied due to the discounts granted.

Boeing, on the other hand, specified that they will all be equipped with General Electric (GE) engines.

On the New York Stock Exchange, Boeing’s stock rose 1% at the end of the session and that of GE by 1.6%.