Saudi carrier flynas signs deal for 80 Airbus planes

Saudi chief executive of NAS Holding, Bander al-Mohanna, shakes hands with the Middle East director for the European Aerospace company, Fouad Attar, as they exchange files after signing an $8.6 billion deal with European plane manufacturer Airbus to purchase 80 A320neo single-aisle jets in Riyadh. (AFP)
Updated 16 January 2017
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Saudi carrier flynas signs deal for 80 Airbus planes

RIYADH: Saudi carrier flynas on Monday signed an $8.6-billion deal with European plane manufacturer Airbus to purchase 80 A320neo single-aisle jets.
Flynas chairman Ayed Al-Jeaid said at a ceremony in Riyadh that the deal includes an option for 40 more of the short to medium-haul planes, to cater for what airline executives described as a growing domestic market.
Bander Al-Mohanna, the chief executive of NAS Holding, of which flynas is a division, signed the agreement with Fouad Attar, Middle East director for France-based Airbus.
Mohanna told a news conference following the ceremony that the aim of the deal was for flynas to “play a leading role in the market” which he described as “very huge.”
Delivery would begin next year and continue until at least 2026, flynas executives said.
The 10-year-old airline exclusively operates the A320, leasing almost 30 of the aircraft, and its passenger numbers now exceed six million annually, executives said.
The carrier concentrates on the Arabian peninsula and the immediate vicinity within four hours’ flying time.
“Our major focus is to serve the kingdom of Saudi Arabia,” which accounts for 70 percent of the airline’s flights, Mohanna said.
State-owned Saudi Arabian Airlines, known as Saudia, is the dominant player and aims to expand its own fleet to 200 aircraft by 2020.
Saudia flew more than 29 million passengers in 2015, and in June last year placed an $8-billion order with Airbus for 50 planes for domestic flights.
Two new entrants, Nesma and SaudiGulf, have launched domestic flights but Jeaid told the ceremony: “We don’t believe that such competition threatens us.”
Under its wide-ranging Vision 2030 plan announced in April, Saudi Arabia aims to diversify its oil-dependent economy.
Among the measures is development of the tourism sector, privatization of state-owned services including airports, and a linking of transport networks to position Saudi Arabia as a regional logistics hub.
The plan also calls for an increase in the number of Muslim visitors performing the umra minor pilgrimage to Islam’s holiest sites in Makkah and Medina.
“We expect a lot more traffic just from local pilgrimage and international pilgrimage,” flynas CEO Paul Byrne told AFP after the ceremony.
He said that with around half the kingdom’s airports currently served by flynas, the remainder provide growth potential, as does the kingdom’s youthful population.
More than half of Saudis are under 25.
“There’s a lot of young Saudis now who are going to generate a lot of business for the airlines in the coming years and decades,” Byrne said.
He added that owning planes, rather than leasing, gives the airline more control over its financial future.
Leasing new planes would have come at “a much higher premium,” he said, adding that the flynas purchase schedule calls for a maximum of 10 A320neos to be delivered in a year.
Even before it unveiled its economic reform plan, the Arab world’s largest economy was spending billions of dollars on building and upgrading airports.
Riyadh-based Kingdom Holding Co, a diversified global investor with stakes ranging from hotels to entertainment and banking, owns a 34-percent stake in flynas.
Airbus said last week it had outstripped its own delivery expectations in 2016, closing the gap with Boeing and beating its US rival on orders.
The European manufacturer said it delivered a record 688 commercial planes last year, exceeding its own target.


British Steel collapses, threatening thousands of jobs

Updated 22 May 2019
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British Steel collapses, threatening thousands of jobs

LONDON: British Steel Ltd. has been ordered into liquidation as it struggles with industry-wide troubles and Brexit, threatening 5,000 workers and another 20,000 jobs in the supply chain.
The company had asked for a package of support to tackle issues related to Britain’s pending departure from the European Union. Talks with the government failed to secure a bailout, and the Insolvency Service announced the liquidation on Wednesday.
“The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site,” said David Chapman, the official receiver, referring to the Scunthorpe plant in northeast England.
The company will continue to trade and supply its customers while Chapman considers options for the business. A team from financial firm EY will work with the receiver and all parties to “secure a solution.”
“To this end they have commenced a sale process to identify a purchaser for the businesses,” EY said in a statement.
The government said it had done all it could for the company, including providing a 120 million pound ($152 million) bridging facility to help meet emission trading compliance costs. Going further would not be lawful as it could be considered illegal state aid, Business Secretary Greg Clark said.
“I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made,” he said.
Unions had called for the government to nationalize the business, but the government demurred.
The opposition Labour Party’s deputy leader, Tom Watson described the news as “devastating.”
“It is testament to the government’s industrial policy vacuum, and the farce of its failed Brexit,” he said in a tweet.
The crisis underscores the anxieties of British manufacturers, who have been demanding clarity around plans for Britain’s departure from the EU. Longstanding issues such as uncompetitive electricity prices also continue to deter investment in UK manufacturing, said Gareth Stace, the director-general of UK Steel, the trade association of the industry.
“Many of our challenges are far from unique to steel — the whole manufacturing sector is crying out for certainty over Brexit,” Stace said. “Unable to decipher the trading relationship the UK will have with its biggest market in just five months’ time, planning and decision making has become nightmarish in its complexity.”
Greybull Capital, which bought British Steel in 2016 for a nominal sum, said turning around the company was always going to be a challenge. It praised the trade union and management team, but said Brexit-related issues proved to be insurmountable.
“We are grateful to all those who supported British Steel on the attempted journey to resurrect this vital part of British industry,” it said in a statement.