On Sunday, Crown Prince Mohammed bin Salman announced Saudi Arabia will launch a new state-run airline called Riyadh Air, and The Wall Street Journal reported the carrier will likely purchase a large order of Boeing jets.
The Middle Eastern nation already has another government-run airline – Saudia, which was founded in 1945 and travels to over 90 destinations across Asia, Europe, Africa, and North America. And it's not entirely clear why it needs a second, but party on! The Saudi Arabia Public Investment Fund says the new carrier is a way to diversify the nation's economy beyond its robust oil industry and enable "Riyadh to become a gateway to the world and a global destination for transportation, trade, and tourism."
For months, Boeing and Airbus have been competing for a deal with the Middle Eastern nation, the WSJ reported. But now it looks like the Saudi PIF has finally made a decision:
- The PIF is expected to spend $35 billion on roughly 100 or more Boeing planes, including wide-body jets fitted for international travel. News of the deal comes shortly after Air India made the largest airplane purchase in history: 470 jets from Boeing and Airbus for roughly $85 billion.
- To make a splash, the PIF also tapped Tony Douglas, who was the CEO of the United Arab Emirate's state-run airline for the past five years, to run Riyadh Air.
Why Can't We Be Friends: If the deal with the US-based plane maker materializes, it'd be another signifier of easing tensions between America and Saudi Arabia. In January, the Biden administration announced they were no longer pursuing plans to retaliate against Saudi Arabia for cutting its oil production by 2 million barrels per day. Plus, the Saudis are now looking to ease tensions and reopen communications with Iran, after a round of peace talks orchestrated by China.
(The Motley Fool)