Saudi flyadeal set to order Airbus A330neo jets, sources say

By AIRBUS-CEO-f4f6061d-19a5-43db-ab23-77c54f0b451c>Tim Hepher

DUBLIN (Reuters) -Saudi budget airline AIRBUS-FLYADEAL-bac76045-6cee-488d-aa36-e39687fd881d>flyadeal is finalising a deal to order 10 Airbus A330neo jets in its first full-blown expansion into wide-body planes as the kingdom pursues a surge of spending on aviation, industry sources said on Tuesday. The low-cost subsidiary of state carrier Saudia is likely to announce the order for the upgraded A330-900 variant in the coming weeks after comparing it with Boeing's smaller 787-9, and the first jets are expected to arrive in 2027, the sources said. Flyadeal and Airbus declined comment. An order for 10 A330-900s would be worth some $1.1 billion after typical discounts, according to estimated delivery prices from Cirium Ascend. Airbus no longer publishes catalogue prices.

Flyadeal has also negotiated purchase rights for an additional 10 A330neos, the sources said. A purchase right locks in prices without specifying delivery dates and can be held for longer than an option, which includes prices and delivery slots.

The deal comes after Reuters first reported last June that Jeddah-based AIRBUS-FLYADEAL-bac76045-6cee-488d-aa36-e39687fd881d>flyadeal was studying an order for between 10 and 20 wide-body jets to add new destinations and carry more passengers into airport slot-constrained markets, such as Dubai.

Saudi Arabia's aviation sector is expanding as the kingdom invests billions of dollars in its Vision 2030 plan to diversify its economy away from fossil fuels and boost its private sector.

The latest AIRBUS-FLYADEAL-bac76045-6cee-488d-aa36-e39687fd881d>flyadeal move comes months after competing Saudi budget carrier Flynas, which is privately owned, placed a provisional order for 75 Airbus jets including 15 A330neos. Startup Riyadh Air has ordered both Boeing and Airbus jets. Saudi Arabia has the third largest number of jets on order as a proportion of its existing fleet, behind India and Malaysia, Jim Morrison, chief risk officer of leasing company Avolon, told the Airline Economics conference in Dublin.

FLEET PLANS

In service since 2018, the A330neo is an upgraded version of the 1990s-designed A330. It comes in two versions, of which the A330-900 is the largest with room for 460 people in the all-economy high-capacity layout likely to be flown by AIRBUS-FLYADEAL-bac76045-6cee-488d-aa36-e39687fd881d>flyadeal. The 787-9 can carry 406 people in a dense layout but is broadly sold out for this decade, conference delegates said.

Flyadeal CEO Steven Greenway, a former senior executive at Singapore Airlines subsidiary Scoot who was appointed a year ago, has said AIRBUS-FLYADEAL-bac76045-6cee-488d-aa36-e39687fd881d>flyadeal aims for some 100 jets by 2030.

It has 36 Airbus narrow-body aircraft in its fleet and another 51 on order via Saudia Group, owner of the Saudia airline, which ordered 105 Airbus narrow-body jets last May. In the past two years, it has brought in earlier versions of A330 and Boeing 777s on "wet lease" with outside crews to serve seasonal pilgrimage traffic to Saudi Arabia, but the new order is its first permanent expansion into the industry's large jets.

Low-cost carriers have had mixed success running wide-body jets, which can have more complex operations than the industry's workhorse single-aisle jets, such as overnight stops for crew. Speaking to Reuters last June, Greenway dismissed the concerns, saying the Atlantic market where some of the earlier failures happened has unique pressures, while large planes are more routinely used to fly relatively short distances in Asia.

(Reporting by AIRBUS-CEO-f4f6061d-19a5-43db-ab23-77c54f0b451c>Tim Hepher. Editing by Tomasz Janowski and Mark Potter)