Boeing aircraft orders are valued at nearly $37 billion and are unsure if it included the sharp discounts that airline customers usually receive, particularly for large orders
Boeing on Tuesday announced a whopping $37 billion deal with Saudi airlines and embarks on the selling of 78 of its 787 Dreamliner planes. The agreement is predominantly with two Saudi airlines and marks one of the largest orders for wide-body jets in recent months. The new order of jetliners will be going to a new airline called Riyadh Air, which was announced by Saudi Crown Prince Mohammed bin Salman, and Saudi Arabian Airlines or Saudia. Riyadh air is expected to purchase 39 wide-body jets, which is also one of the largest models of planes with options of nearly 40 more. The existing Saudi Arabian Airlines is expected to buy a similar number of jets.
Boeing, as of now, hasn’t revealed a timeline for the delivery of jets, and The Wall Street Journal earlier estimated that Boeing aircraft orders are valued at $35 billion and is unsure if it included the sharp discounts that airline customers usually receive, particularly for large orders. Riyadh Air in a news release stated that the decision to purchase additional jets will support the country’s goal of supporting 330 million passengers and will attract 100 million visits every year by 2030.
Wide-body jets are widespread among global airlines for their fuel efficiency and their ability to carry passengers on long international routes.
The latest deal showcases a newfound demand for wide-body aircraft, and they retrieve a higher price than the common narrow-body jets. The terms and conditions of the deal could change until they are finalized, and even after that the agreements could fallout. But once completed, the Boeing-Saudi deal would be the latest among the other orders received for the aircraft manufacturer. United Airlines Holdings, which is a Chicago-based carrier, placed orders for nearly 100 Dreamliners, which was a part of the deal that included smaller 737 MAX narrow-body jets.
Easing Tensions
The deal with US aircraft manufacturers and Saudi Airlines comes amidst the diminishing tensions between both countries. Recently, Saudi Arabia asked the United States of America to provide security assurances and aid in developing its nuclear program. A deal between Saudi and Israel has become a priority for the Biden administration in connection with the Russia-Ukraine war and Iran’s nuclear program.
Riyadh Air is owned by the country’s independent wealth fund and will be directed by former Chief Executive Officer of Etihad Airways, Tony Douglas. In an interview with CNBC, Tony Douglas mentions that the ambition of the kingdom is huge. “There will be more [aircraft] orders, for the avoidance of any doubt,” stated Douglas. He also added that the recent deal will help connect Saudi Arabia with 100 destinations. Boeing had also recently struck a deal with Air India for Airbus and 460 Boeing planes.
Boeing is currently planning to resume deliveries of the wide-body 787 which had been halted since the fall of 2020, as the aircraft manufacturers faced some production difficulties that required some detailed inspections. Due to the Dreamliner delivery delays, American airlines revealed a reduction in its international flying. The company also expects to receive around 10 Dreamliners this year, 3 down from the previous expectation.
The company also informed that it delivered 28 planes in February, an increase in deliveries compared to the previous year. Boeing shares increased by 1.92% on Tuesday outstripping the wider market.
