US-Saudi partnership to propel growth in aviation as future holds new opportunities

Special US-Saudi partnership to propel growth in aviation as future holds new opportunities
US president is on an ongoing visit to the Kingdom. Saudi arabia expects to triple the contribution of its aviation sector to the national gross domestic product from Sr80 billion ($21.3 billion) in 2018 to Sr280 billion by 2030. (Shutterstock)
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Updated 16 July 2022

US-Saudi partnership to propel growth in aviation as future holds new opportunities

US-Saudi partnership to propel growth in aviation as future holds new opportunities
  • Biden’s visit could mark the beginning of world-class commercial aviation infrastructure in Saudi Arabia
  • Kingdom aims to triple aviation sector’s contribution to GDP from SR80 billion in 2018 to SR280 billion by 2030

JEDDAH: When US President Franklin Roosevelt presented a Douglas DC-3, a propeller-driven airline, as a gift to King Abdul Aziz in 1945, the occasion marked the starting point of Saudi Arabia’s civil aviation industry.

The Kingdom’s flag carrier Saudi Arabian Airlines, now known as Saudia, was founded in September 1945 as a wholly-owned government agency under the Ministry of Defense.

Nearly eight decades later, as US President Joe Biden’s flight hit the tarmac of King Abdulaziz International Airport in Jeddah on Friday, there was a growing sense that the visit would mark the beginning of world-class commercial aviation infrastructure in the Kingdom.

His predecessor Donald Trump’s visit to the Kingdom in 2017 led to a windfall in aviation deals between the two countries.




Saudi Arabian Airlines, now known as Saudia, was founded in September 1945. 

The event formed defense and commercial agreements for Boeing, worth over $50 billion, which further strengthened the Boeing-Saudi Arabia partnership, according to a statement issued by Boeing.

Among the deals signed was the sale of 16 widebody jets to Dammam-based carrier Saudi Gulf; the carrier later ceased operations in 2020 due to the COVID-19 outbreak. 

The deals came during the Saudi US CEO Forum, where Saudi King Salman and Trump met with CEOs, including Boeing Chairman, President and CEO Dennis Muilenburg. 

“I appreciate the efforts of King Salman, President Trump and his administration to support American manufacturers as we seek to grow at home and around the world,” Muilenburg said in a statement during the visit.

Taking on the headwinds

Boeing has had a crucial presence in the Kingdom since 1962, when the national carrier took delivery of two narrow-bodied Boeing 720s, becoming the first airline in the Middle East to operate commercial jet airplanes.

Over the years, Saudia has taken delivery of most Boeing aircraft, including VIP airplanes. Today the Kingdom represents about 70 percent of its business jet purchases in the Gulf Cooperation Council.

The airline operated its first Boeing 747s service in 1977 when three Jumbo Jets were leased from Lebanon’s national carrier Middle East Airlines. 

Saudia’s all-cargo flights between the Kingdom and Europe witnessed the introduction of American Lockheed L-1011s and Fairchild FH-27s in the region.

The US-Saudi aviation relationship scaled new heights when Boeing became a member of the King Abdullah University of Science and Technology industrial collaboration program in 2019. The program facilitates local and international industrial collaboration.  

The Obama-Biden Administration widened the scope of aviation in the region. For instance, GE Aviation Services, a leading US manufacturer of jet and turboprop engines, signed an exclusive 10-year material agreement with Saudia to cover its fleet of CFM56-5B engines in 2009.

Flynas, the Kingdom’s low-cost carrier, uses GE engines in their A320 aircraft.

“This ecomagination-certified engine has a 15 percent lower fuel burn during cruise than the platform it replaces,” GE stated.

As part of the Saudi localization efforts, GE announced that the company would use its facility, located at King Abdulaziz International Airport in Jeddah, to launch overhaul services on the GE90 engines in the region.

The Royal Saudi Air Force is another major GE Aviation customer, the GE’s Military Systems Operation team partnered with SAEI to establish engine overhaul capability within the Kingdom. The project includes organic capabilities for the disassembly, inspection, repair, assembly and testing of the company’s engines undertaken at Saudia Aerospace Engineering Industries’ facility in Jeddah.

In 2014, Boeing Research & Technology opened an office at KAUST to increase academic engagements with professors and resident companies interested in collaboration, research, and development. 

The same year Boeing and King Abdulaziz City for Science and Technology launched the Decision Support Center in Riyadh. The center has been serving as an experimentation hub between customers and partners in the Kingdom, offering more informed interoperability decisions for aerospace and defense products.  

In 2015, Boeing signed an agreement with Saudia Aerospace Engineering Industries to create the Saudi Rotorcraft Support Co. The company offers rotorcraft maintenance, repair, overhaul and support in the Kingdom.  

The Trump-Pence Administration further bolstered the aviation space when Boeing and the Saudi National Industrial Development signed a memorandum of understanding to further the development of the aerospace industry in the Kingdom.




Boeing has had a crucial presence in the Kingdom since 1962. (Getty Images/AFP)

In January 2021, SAEI, the maintenance, repair and overhaul division of Saudia, signed a bilateral agreement with the US Spartan College of Aeronautics and Technology for exchanging training experiences and qualifying national cadres in the field of aircraft maintenance.

The agreement included providing consultations for SAEI’s employees and supporting its technical school with specialized expertise and trainers to enhance the quality of the school’s outputs. 

Saudi aviation opportunity

Saudi Arabia expects to triple the contribution of its aviation sector to the national gross domestic product from SR80 billion ($21.3 billion) in 2018 to SR280 billion by 2030.

Abdulaziz Al-Duailej, president of the Kingdom’s General Authority of Civil Aviation, confirmed at the Dubai Airshow in 2021 its intention to top the Middle East in the aviation sector.

Subsequently, Saudi Arabia’s Crown Prince Mohammed bin Salman announced his plans to launch a second national airline as part of a broader strategy to turn the Kingdom into a global logistics hub as it seeks to diversify from oil.




US President Franklin Roosevelt presented a Douglas DC-3, a propeller-driven airline, as a gift to King Abdul Aziz in 1945. 

The official state media reported that creating another flag carrier would catapult the Kingdom into the fifth largest nation in terms of air transit traffic.

“We heard about this and will be excited to compete and race our products with any airlines in Saudi Arabia,” Omar Arekat, Boeing’s Middle East and Africa vice president of commercial sales and marketing, told Arab News.

“The Saudi market has a lot of growth potential, and we are working with them for different opportunities.”

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OPEC+ may consider output cut of more than 1 million bpd

OPEC+ may consider output cut of more than 1 million bpd
Updated 02 October 2022

OPEC+ may consider output cut of more than 1 million bpd

OPEC+ may consider output cut of more than 1 million bpd
  • The figure is slightly above estimates for a cut given last week

RIYADH:  The Organization of the Petroleum Exporting Countries and its allies led by Russia, also known as OPEC+, will consider an oil output cut of more than a million barrels per day when it meets on Oct. 5, OPEC sources told Reuters on Sunday.

The figure is slightly above estimates for a cut given last week, which ranged between 500,000 bpd and 1 million bpd.

OPEC+ is meeting in person in Vienna for the first time since March 2020. “It is a meeting that is taking place at a very interesting global time,” one of the sources said.

The output cuts are being considered on the back of a slide in oil prices from multiyear highs reached in March and market volatility. Saudi Arabia first flagged the possibility of cuts to correct the market in August.

Earlier this week, a source familiar with Russian thinking said Moscow could suggest a cut of up to 1 million bpd, while an OPEC source put the likely figure closer to 500,000 bpd. Talks are expected to continue ahead of the meeting.

FASTFACTS

OPEC+ is meeting in person in Vienna for the first time since March 2020.

Saudi Arabia first flagged the possibility of cuts to correct the market in August.

The output cuts are being considered on the back of a slide in oil prices from multiyear highs reached in March and market volatility.

India cuts tax

The Indian government has cut a windfall tax on domestically produced crude oil to 8,000 ($97.99) rupees per ton from 10,500 rupees per ton from Sunday, after a decline in global oil prices.

India has also scrapped an export tax on jet fuel and halved export duties on diesel to 5 rupees per liter from Sunday, a government notification said.

NNPC transaction

Nigeria’s state-owned oil company NNPC Ltd. has bought the marketing business of unlisted OVH Energy, giving it access to 380 fuel stations in Africa’s largest oil producer and Togo, among other assets, the two companies said on Saturday.

OVH Energy Marketing, the owner and operator of Oando branded retail service stations, said the outlets would be rebranded NNPC and full integration is expected by the end of 2023.

The deal also gives NNPC access to eight liquefied petroleum gas plants, three aviation depots and 12 warehouses.

NNPC, which became a commercial entity in July, already owns more than 500 fuel stations across Nigeria and said it would be ready for an initial public offering by mid-next year.


Saudi real GDP expected to rise by nearly 8 percent, say analysts

Saudi real GDP expected to rise by nearly 8 percent, say analysts
Updated 02 October 2022

Saudi real GDP expected to rise by nearly 8 percent, say analysts

Saudi real GDP expected to rise by nearly 8 percent, say analysts
  • Inflation is predicted to be 2.6 percent and 2.1 percent in 2022 and 2023 respectively: Al Rajhi Capital

RIYADH: Saudi Arabia’s budgeted revenues for 2023 are likely to be based on the Brent price at $76 per barrel, said Al Rajhi Capital in its assessment of the Kingdom’s budget figures.  

“For 2023, we believe oil revenues could reach SR754 billion ($200.7 billion) and non-oil revenue at SR417 billion,” said the head of research at Al Rajhi Capital Mazen Al Sudairi.

“Based on our assessment, the government’s 2023 budgeted revenues are likely based on an assumption of brent at around $76 a barrel.” 

Real gross domestic product growth is forecast to increase by nearly 8 percent year-on-year in 2022 and 3.1 percent year-on-year in 2023, according to Al-Rajhi Capital.

Inflation is expected to be 2.6 percent and 2.1 percent in 2022 and 2023 respectively, Al-Rajhi said.

Revised 2022 revenues are mostly in line with estimates, however, the expenditure budget is much higher than from an earlier announcement, it said.

The Kingdom’s Finance Ministry’s preliminary budget statement projected spending to reach SR1.11 trillion next year, with revenue of SR1.12 trillion. 

The 2023 spending budget was raised by 18 percent, with a slight fiscal surplus of SR9 billion expected for 2023.

The world’s largest oil exporter is expected to balance the books in the coming year, having emerged with a quickly developing balance sheet due to the rebound in crude. 

Saudi officials expressed intention to change the heavy reliance on petrodollars and “decouple” the Kingdom’s spending from oil volatility as it puts the country’s economy at the mercy of uncertainty in the oil market. 

Its budget surplus was recorded at SR78 billion in the second quarter of 2022, an almost 50 percent rise from the same time last year. 

Its revenue reached SR370.4 billion whereas expenditure totaled SR292.5 billion in the second quarter of this year, according to the ministry. 

The ministry’s estimates showed that oil revenue stood at SR250.4 billion, signaling an 89 percent year-on-year rise in the second quarter. 

However, the Kingdom’s non-oil revenues only rose by 3 percent to SR120 billion in the second quarter. 

Domestic debt reached SR604.8 billion at the end of June, up from SR558.8 billion in the previous half, showed the ministry data. 

The Finance Ministry’s data showed that the Kingdom’s external debt fell from SR379.3 billion to SR361.8 billion in the same period. 

The objectives of the state’s general budget for the fiscal year 2023 come as a continuation of the process of work to strengthen and develop the financial position of the Kingdom, Finance Minister Mohammed Al-Jadaan said.

“The government attaches great importance to enhancing the support and social protection system and accelerating the pace of strategic spending on Vision (2030) programs and major projects to support economic growth,” Al-Jadaan added.

The Kingdom’s economy has demonstrated its strength and durability by achieving high growth rates, after taking many policies and measures with the aim of protecting the economy from the repercussions of inflation and supply chain challenges, the minister said.


Abu Dhabi Chamber of Commerce forms new board for businesswomen council

Abu Dhabi Chamber of Commerce forms new board for businesswomen council
Updated 02 October 2022

Abu Dhabi Chamber of Commerce forms new board for businesswomen council

Abu Dhabi Chamber of Commerce forms new board for businesswomen council
  • Council enables female entrepreneurs to capitalize on business opportunities

ABU DHABI: The Board of Directors of the Abu Dhabi Chamber of Commerce and Industry has formed a new board for the Abu Dhabi Businesswomen Council, Emirates News Agency reported.

The new board’s mission is to help female entrepreneurs improve their skills, introduce them to relevant laws and policies, and teach them how to take advantage of local and federal government initiatives.

It is part of the chamber’s efforts to help businesswomen and female entrepreneurs in Abu Dhabi contribute to the emirate’s economic growth.

The ADBWC board, chaired by Asma Al-Fahim, is made up of Abu Dhabi Chamber board members as well as successful Abu Dhabi businesswomen such as Nour Al-Tamimi, Dr. Khadija Al-Ameri, Marwa Al-Mansoori and Shaikha Al-Nowais.

“Over the past 50 years, the UAE has placed women’s empowerment amongst its top priorities and supported the Emirati woman to be a key partner in building the UAE,” Al-Fahim said.

She added: “The support of H.H. Sheikha Fatima bint Mubarak, chairwoman of the General Women’s Union, president of the Supreme Council for Motherhood and Childhood, supreme chairwoman of the Family Development Foundation and honorary chairwoman of the ADBWC, played a huge role in women’s development in all fields, especially entrepreneurship. Thanks to H.H. Sheikha Fatima, the Emirati woman is now equipped with all the factors of success to occupy her proper place regionally and internationally.”

Al-Fahim added that the ADBWC is eager to increase communication with businesswomen in Abu Dhabi in order to keep them up to date on the latest economic changes.

Furthermore, Al-Fahim said that the council will launch new initiatives and programs to support the business environment, giving female entrepreneurs the necessary tools to capitalize on business opportunities locally, regionally and internationally.


Saudi Mouwasat completes $27m acquisition of 51% of Jeddah Doctors Co.

Saudi Mouwasat completes $27m acquisition of 51% of Jeddah Doctors Co.
Updated 02 October 2022

Saudi Mouwasat completes $27m acquisition of 51% of Jeddah Doctors Co.

Saudi Mouwasat completes $27m acquisition of 51% of Jeddah Doctors Co.

RIYADH: Saudi healthcare provider Mouwasat Medical Services Co. said that it has completed the acquisition of 51 percent of Jeddah Doctors Co. in a deal worth SR102 million ($27 million).

The financial impact of this acquisition is expected to appear in the third quarter of 2022, according to a bourse filing.

Jeddah Doctors Co. is a Saudi closed joint stock company that owns a hospital presently under construction in Jeddah called Jeddah Doctors Hospital.


TASI in green as recession concerns ease: Closing bell

TASI in green as recession concerns ease: Closing bell
Updated 02 October 2022

TASI in green as recession concerns ease: Closing bell

TASI in green as recession concerns ease: Closing bell

RIYADH: The Saudi main index ticked up in its first trading session of October as investor recession fears subsided.

The Tadawul All Share Index ended  0.72 percent higher to reach 11,487; the parallel market Nomu edged 0.34 percent higher to 19,939.

Saudi oil giant Aramco ended with a 0.28 percent decline, while Rabigh Refining and Petrochemical Co. edged up 1.31 percent.

The Saudi National Bank, the Kingdom’s largest lender, fell 0.63 percent, while Saudi British Bank increased by 2.43 percent.

The Kingdom’s most valued bank Al Rajhi gained 1.48 percent, while Alinma Bank gained 1.93 percent.

Saudi Paper Manufacturing Co. decreased by 0.19 percent, after it signed SR166 million ($44 million) agreement with Italy-based Toscotec for a raw tissue paper roll production line.

Retal Urban Development Co. dropped 0.28 percent, after its shareholders approved a cash dividend of SR2 per share for the first half of 2022.

Tihama Advertising and Public Relations Co. declined 1.61 percent to lead the fallers, after the company and UK-based WPP postponed their merger agreement until Oct. 31, 2022.

Middle East Healthcare Co. led the pack of gainers with an increase of 9.93 percent.