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PARIS/DUBAI (Reuters) – Saudi Arabia is in complex negotiations to order about 40 Airbus A350 jets in Europe as part of strategic efforts to launch a new airline and challenge heavy haulers in the Gulf, industry resources said.
If confirmed, the acquisition through the Sovereign Public Investment Fund (PIF), valued at $12 billion at list price, could be announced this week when Riyadh hosts a main forum, the Future Investment Initiative (FII), the sources said.
It’s not yet clear whether Boeing will also take part in a really extensive shopping list for the new airline, which will be called RIA, the resources said. A source close to the negotiations warned that it is “not over yet. “
PIF has been negotiating to buy about 75 planes and the source said the kingdom is leaning toward the Boeing 787. Reports have indicated that the airline may also want narrow-body aircraft.
Neither Airbus nor Boeing commented. PIF did not respond to a request for comment.
Any industry deal still requires political approval and also in complex engine negotiations, one of the resources said.
The selection is widely noted as politically charged as the Saudi rally takes a stand amid emerging tensions between Washington and Riyadh, two industry officials said.
The IFI is a boast of Crown Prince Mohammed bin Salman’s Vision 2030 plan to wean the oil economy by creating new industries that also create jobs for millions of Saudis and attract foreign capital and talent.
U. S. President Joe Biden promised “consequences” for the U. S. The U. S. and Saudi Arabia have followed an OPEC resolution to cut oil production targets, which Riyadh has championed as a service to market stability.
Reuters first reported in August that Saudi Arabia was discussing a giant order for wide-body aircraft.
Bloomberg News reported Sunday that a deal could involve up to 80 planes.
The new airline will be in the capital, Riyadh, while state-owned airline Saudia will be in the Red Sea city of Jeddah as part of a shipping strategy that includes the creation of two hubs to compete with airlines from the United Arab Emirates and Qatar.
(Reporting by Tim Hepher and Yousef Saba; Editing via Mark Porter)