Saudi Arabian Airlines signs $3bn plane financing deal

Agreement to fund 73 new Airbus and Boeing aircraft is the largest in the company's history

Saudia has a fleet of 170 aircraft with an average age of five years. EPA

Saudi Arabian Airlines Corporation, the country's national airline, signed an 11.2 billion Saudi riyal ($3bn) agreement with six local banks to finance the purchase of 73 aircraft.

The funding deal, the biggest in the airline’s history, will be used for the previously-announced purchase of 20 Airbus A321neo aircraft, 15 A321XLRs and 30 A320neos as well as eight Boeing 787-10 aircraft. The Airbus A320neos will be used by the company's low-cost brand, flyadeal.

“This agreement will contribute substantially to the kingdom’s long-term economic growth and development," said Saudi Arabia's minister of transport, Saleh bin Nasser Al Jasser. “Saudi Arabian Airlines Corporation’s fleet expansion will boost tourism and its allied sectors, generate substantial employment opportunities, significantly improve air connectivity, and enhance the flow of foreign investments."

Saudi Arabian Airlines, known as Saudia, has made significant investments in its fleet in recent years as the kingdom pushes ahead with a plan to attract 100 million tourists and 30 million Umrah pilgrims per year under its Vision 2030 economic diversification plan. The airline took delivery of its fifth Boeing 787-10 in October, bringing the total number of aircraft it operates to 170.

Despite the massive disruption caused to the airline industry caused by Covid-19, which the International Air Transport Association said will cost the industry $157bn in lost revenue over two years, Saudia said that it received total bids of more than 18 billion riyals. The six banks funding the deal are Al Rajhi Bank, Saudi British Bank, Arab National Bank, Samba, Bank AlJazira, and Bank Albilad. HSBC Saudi acted as financial adviser and investment agent for the airline, which said the deal covers its financing needs until mid-2024.

“This financing agreement demonstrates our resilience as well as our determination to capture opportunities in securing competitive funding to enable our fleet expansion with a range of new and modern aircraft that will enable us to meet the national aviation requirements in the years to come,” Saudia's director general Ibrahim bin Abdulrahman Al-Omar said.