JEDDAH, 6 January 2007 — Saudi Arabian Airlines, the national flag carrier, is in negotiations with Boeing and Airbus to purchase new aircraft worth $12 billion (SR45 billion) to strengthen its fleet and provide seats to its growing number of passengers, The Business, a British newspaper reported quoting unnamed sources.
The deal, the largest of its kind, to purchase around 60 planes will bolster the airline’s current fleet of 139, helping it to counter the challenges posed by regional and international airline companies. According to one source, Saudi Arabian Airlines, which is witnessing rapid expansion, required a variety of new planes.
“This will take some time to negotiate because it’s going to be a huge order, in excess of 60 planes,” said the source. “They are talking to both Airbus and Boeing. They are growing massively and don’t have enough aircraft to meet demand. Currently they are underplaned (short of aircraft) and leasing aircraft,” the newspaper’s online edition said.
Crown Prince Sultan, deputy premier and minister of defense and aviation and chairman of Saudi Arabian Airlines, recently commended the airline’s efforts to further improve its services in line with its long-term development strategy. Sultan made this comment while presiding over the board meeting.
Khaled Al-Mulhim, director general of Saudia, said the airline’s 10-year strategy was aimed at confronting the big competition from other airline companies.
A Western source confirmed negotiations were ongoing and that the Saudis would probably split the order between the two Western plane makers, in a similar fashion to recent defense orders.
Last November, Mulhim said the number of visitors to the Kingdom would triple from a current 3.5 million in the next 10 years as increased numbers of Muslims visit the country for Haj and Umrah.
Saudia carried a record 17.57 million passengers in 2006, registering an increase of 471,462 passengers compared to the previous year. These passengers included 720,516 Umrah pilgrims whom the airline transported from its domestic and international stations.
Speaking about Saudia’s Haj operation for 2006-2007, Mulhim said the airline would be carrying 906,744 pilgrims from outside the Kingdom on their arrival and return flights. The airline transported 867,828 pilgrims during the 2005 Haj season.
“Saudi Arabian Airlines has been looking in recent months to ways it can renew its wide bodied fleet,” the daily quoted the Western source as saying. Mulhim is already taking emergency measures by leasing aircraft and using long-haul planes for short-haul flights to provide extra capacity.
Saudia’s last major aircraft order was for 61 Boeing aircraft in 1995, which included several 747s delivered over a four-year period. In 2005, it bought 15 66-seat Embraer planes from Brazil for $400 million.
The Saudi order will be one of the biggest of 2007, on a par with the 70 737s Ryanair bought from Boeing in 2002. In October last year, Airbus signed an agreement to sell 150 A320s to China in a deal worth between $53 million and $82 million a plane.
The delivery of the new planes will not come in time for the proposed flotation of Saudi Arabian Airlines, expected in 2008. As part of preparations for the IPO, Saudia is currently auctioning stakes in five of its divisions. This started with catering, while cargo, ground handling, maintenance and training will follow in the first half of this year.
