Airbus eyes Saudi deal for nearly 40 A350s

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PARIS/DUBAI, October 23 (Reuters) – Saudi Arabia is in advanced negotiations to order nearly 40 A350 planes from European Airbus (AIR.PA) as part of strategic efforts to launch a new airline and challenge heavy carriers in the Gulf, industry sources said.

If confirmed, the purchase by the Sovereign Public Investment Fund (PIF), worth $12 billion at list price, could be announced as early as this week when Riyadh hosts a major forum, the Future Investment Initiative (FII), the sources said.

It was unclear if Boeing (TO FORBID) would also grab part of a major shopping list for the new airline, which will be called RIA, the sources said. A source familiar with the negotiations warned that it was “not over yet”.

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PIF has been negotiating to buy some 75 jets and another source said the kingdom is leaning towards the Boeing 787. Reports have said the airline may also need narrow-body jets.

Neither Airbus nor Boeing commented. PIF did not immediately respond to a request for comment.

Any trade deal still needs political approval and also depends on complex engine negotiations, one of the sources said.

The choice of supplier is widely seen as politically charged as the Saudi rally unfolds amid growing tensions between Washington and Riyadh, two industry sources said.

The IFI is a showcase for Crown Prince Mohammed bin Salman’s Vision 2030 plan to wean the economy off oil by creating new industries that also generate jobs for millions of Saudis, and attract foreign capital and talent.

US President Joe Biden has promised “consequences” for US-Saudi relations following an OPEC+ decision to cut oil production targets, which Riyadh has defended as serving market stability.

Reuters first reported in August that Saudi Arabia was discussing a large jumbo jet order.

Bloomberg News reported Sunday that a deal could involve up to 80 planes.

The new airline will be based in the capital Riyadh, while state-owned airline Saudia will be based in Jeddah, a city on the Red Sea, as part of a transport strategy that includes the creation of two hubs to compete with carriers from the United Arab Emirates and Qatar.

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Reporting by Tim Hepher and Yousef Saba; Editing by Mark Porter

Our standards: The Thomson Reuters Trust Principles.

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