Big Airbus order overshadows Boeing at Riyadh conference

By Pesha Magid

RIYADH (Reuters) -Saudia Group, owner of Saudia airline and budget carrier flyadeal, placed a hefty order for 105 Airbus narrow-body aircraft on Monday, marking a bounce-back for the European planemaker just months after Boeing had been tipped to win more Saudi business.

Ibrahim Al Omar, Saudia Group's director general, described the order for 12 A320neo and 93 A321neo single-aisle aircraft as the largest in the country's history.

The state-owned group said Saudia would be receiving 54 of the A321neo jets, while flyadeal would acquire 12 A320neos and the remaining A321neos.

None of the parties disclosed the value, but organisers of the Future Aviation Forum in Riyadh where the order was announced pegged it close to $19 billion.

Airbus does not publish prices, but the A321neo was worth close to $130 million each at list prices released in 2018. Flyadeal CEO Steven Greenway said Saudia got the order at a discount, as is typical in the industry.

Saudi Arabia is spending big on becoming a new regional aviation hub by launching new airline Riyadh Air, announcing a massive six-runway airport and ordering 78 Boeing 787 Dreamliners last year.

The latest announcement, made in the Versailles-like King Abdulaziz Conference Center styled with airplane-themed runways on the floor and faux planes serving as meeting rooms, unexpectedly leapfrogged a possible order from Boeing, whose presence was muted.

In November, Saudia Arabia's newest airline Riyadh Air said it was weeks away from placing a large narrow-body order, which Bloomberg News reported involved the Boeing 737 MAX.

Months later, no such order has surfaced, and Monday's announcement placed Airbus firmly in the spotlight.

"What happened was the media three weeks later spent every hour of every day writing negative stories about commercial aviation," Riyadh Air CEO Tony Douglas told Reuters on Monday.

He said he was not referring only to the latest crisis at Boeing after a panel tore off a 737 MAX 9 in January.

"The last thing I want to do is present my good news and have it in a context of things that are going on elsewhere, which are not quite as positive," he said, "Be it Airbus can't deliver on time (or) Boeing is having some technical problem."

SUPPLIER BALANCE Douglas declined to be drawn on future fleet decisions. "We will (maintain) the strategy to stay as split (between suppliers) as we possibly can," he said.

Last June Douglas told Reuters the airline planned a total of three orders to start the new airline.

Analysts say business and other announcements in the Gulf region are being closely watched amid the regional tensions stemming from the Israel-Gaza conflict.

Experts have signalled for months that Saudi Arabia has grown increasingly frustrated with what it sees as a U.S. failure to rein in Israel.

Douglas denied any political element to the stalled aircraft deal at Riyadh Air or the order of aircraft announcements.

Flyadeal's Greenway said it selected Airbus because it already uses the European supplier, even though it has been struggling with delivery delays.

"It's public knowledge there have been constraints and delivery delays for everyone," he said. "I don't like it.... (but) what can you do?"

Saudia Group said its planes would be delivered from the first quarter of 2026 up to 2032.

Saudia plans to expand rapidly over the next seven years as part of Crown Prince Mohammed Bin Salman's Vision 2030 programme to wean the kingdom off its oil dependence. Tourism is a key pillar of the diversification strategy.

(Reporting by Pesha Magid, Rachna Uppal, Tim Hepher; Editing by Louise Heavens, Emelia Sithole-Matarise and Jan Harvey)