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Sources in the aviation sector said that Saudi Arabia is in advanced negotiations to order about 40 "A350" aircraft from the European company Airbus, as part of the strategic efforts to launch a new airline and compete with heavyweight airlines in the Gulf.
The sources added that the sovereign Saudi Public Investment Fund will buy the planes, worth about $12 billion, at the announced prices. She said that if confirmed, the announcement may be soon.
It is not yet clear whether Boeing will sell the planes to the new airline, which will be called "Ria". A source familiar with the negotiations warned that "it is not over yet."
The Public Investment Fund is negotiating to buy about 75 aircraft. Another source said the kingdom is leaning towards buying the Boeing 787. There have been reports that the company may also need narrow-body jets.
Neither Airbus nor Boeing had any comment. The PIF did not immediately respond to a request for comment.
One of the sources said that any trade deal must have political approval, and also depends on the complex engine negotiations.
Two industry sources said the supplier selection is widely seen as having political dimensions, because the Saudi forum is taking place amid heightened tension between Washington and Riyadh.
The Future Investment Initiative is an opportunity to present the 2030 vision of Saudi Crown Prince Mohammed bin Salman, to move the economy away from oil by establishing new industries that also provide job opportunities for millions of Saudis, and to attract foreign capital and talent.
US President Joe Biden pledged to review US-Saudi relations, following the OPEC+ decision to cut oil production, which Riyadh defended as serving market stability.
While Reuters first reported in August 2022 that Saudi Arabia is considering a large order for wide-body aircraft. Bloomberg News said Sunday that the deal could include up to 80 aircraft.
Saudi Arabia said last year that it would launch a second national airline alongside Saudi Arabian Airlines, as part of "Vision 2030" to make the economy less dependent on oil.
The new airline will be based in the capital, Riyadh, while the state-run "Saudi Arabia" airline will be based in Jeddah, under a transportation strategy that calls for the establishment of two centers to compete with Emirati and Qatari airlines.
The new orders will put Boeing's "Max 737" in competition with Airbus's "A320neo" in the short-haul category, while the competition for long-haul aircraft will be between the American company's "787 Dreamliner" and the "X777" model. The new model, which has not yet entered service with the European competition "i350", which has been updated in the model "i330neo".
It is not clear whether fleet orders can be divided between the two companies.
The new Saudi airline is expected to appoint Briton Tony Douglas as its CEO. Douglas last week resigned from his position as chairman of Abu Dhabi-owned Etihad Airways, with which the start-up is likely to compete for intercontinental traffic.
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