Saudi Arabia places order for Boeing jets worth $37bn

Saudi Arabia will buy up to 78 Boeing 787 Dreamliner jets with an option to purchase another 43 in a deal worth $37 billion as the kingdom shores up its aviation sector and pours billions of dollars into developing its travel and tourism industry.

The kingdom's new national airline Riyadh Air, launched by state's sovereign wealth fund — the Public Investment Fund — will purchase 39 Boeing 787-9s, with options for an additional 33 787-9s.

The kingdom’s flag carrier Saudi Arabian Airlines (Saudia) will buy 39 wide-body 787-9 Dreamliners and 787-10 jets, with options for 10 additional aircraft. It is the fifth-largest commercial order by value in Boeing’s history. The first deliveries of the wide-body aircraft are scheduled for early 2025. The agreement is part of the kingdom’s strategic plan to transform the country into a global aviation hub.

Boeing's share price jumped more than 4 per cent up to $211.57 a share after the announcement. “This is a momentous day for PIF and Riyadh Air, and highlights our determination to significantly extend Saudi Arabia’s connectivity with the world,” said Yasir Al-Rumayyan, governor of PIF and chairman of Riyadh Air.

“Our stated commitment is to create a world-class airline and this partnership with Boeing in building the fleet is the next step in achieving the aspirations of Saudi Arabia as a global transportation hub.”

The country's Saudi Aviation Strategy calls for tripling annual passenger traffic to 330 million by 2030, boosting the number of destinations to 250 from 99 at present and establishing a new flag carrier. Saudi Arabia aims to attract 100 million visitors annually by 2030.

This strategy is backed by $100 billion in investments from the government and private sector. Saudia currently operates more than 50 Boeing planes on its long-haul network, which also include the wide-body 777-300ER and 787-9 and 787-10 Dreamliner.

Boeing's 787 Dreamliner jets are made mostly out of composite materials, which makes the aircraft lighter and more fuel efficient than other commercial planes.

“Saudia continues its expansion efforts ... the agreement with Boeing delivers on this commitment and the newly added aircraft will further enable Saudia to fulfil its strategic objective of bringing the world to the kingdom,” said Ibrahim Al-Omar, director general of Saudia.

In November, Saudi Arabia's Crown Prince Mohammed bin Salman announced that a new airport would be opened in Riyadh, with six parallel runways, designed to accommodate up to 120 million travellers by 2030.

The deals will support more than one million American jobs in the aerospace supply chain across 44 states, said White House press secretary Karine Jean-Pierre. “The most recent deals with Saudi Arabia alone support more than 140,000 American jobs, many of which do not require a four-year college degree,” she said.

In Saudi Arabia, the new airline is expected to add $20 billion to non-oil GDP growth and create more than 200,000 direct and indirect jobs in the Arab world's largest economy.

The creation of Riyadh Air is in line with PIF’s mandate to diversify the economy and help reduce the kingdom's reliance on oil. The sovereign wealth fund has about $620 billion in assets under management and backs strategic sectors central to the kingdom's economic diversification plans.

The new airline aims to connect millions of leisure and business travellers to more than 100 destinations around the world by 2030.

“The new airline reflects the ambitious vision of Saudi Arabia to be at the core of shaping the future of global air travel and be a true disrupter in terms of guest experience,” said Tony Douglas, chief executive of Riyadh Air.

On Tuesday, Kait's Jazeera Airways announced it is starting a budget airline in Saudi Arabia along with its partners in the kingdom. The new carrier will be based at the King Fahd International Airport in Dammam in the eastern part of the kingdom.