Saudi Arabia is set to spend £30bn on a fleet of 72 Boeing jets in a bid to dominate the Gulf with a new airline.
Riyadh Air, which took off on Sunday, has agreed to buy the Dreamliners in the planemaker’s fifth-biggest order ever, amid a scramble to eclipse neighboring flag carriers Emirates, Qatar Airways and Etihad.
British aviation executive Tony Douglas was poached by Etihad to serve as Riyadh’s chief executive. Peter Bellew, a former chief executive of Malaysia Airlines and a former operations manager at Ryanair and easyJet, has been hired as the new airline’s chief operating officer.
Riyadh’s launch marks an unusual approach by Saudi ruler Mohammed bin Salman to create a new airline from scratch rather than investing heavily in Saudia, which was previously the country’s only national carrier.
Riyadh will focus on operating services from the Saudi capital to make it a hub airport to rival Doha in Qatar. Saudia will focus on flights from Jeddah.
The deal was praised by the White House, which claimed it was worth almost $37bn (£30bn), although deals of this size usually entail big discounts.
Mr Douglas oversaw the construction of Terminal 5 at Heathrow before heading up Laing O’Rourke, the Olympic Games contractor, and heading up Defense Equipment & Support, the UK Ministry of Defense department responsible for all military procurement contracts.
He said the new aircraft order “will serve as the foundation for our global operations as we build the broader network, connecting our guests to Saudi Arabia and many destinations around the world.”
Yasir Al-Rumayyan, chairman of Riyadh and governor of Saudi Arabia’s huge public investment fund, said the new airline would meet aspirations of making Saudi Arabia a global transportation hub.
The first aircraft are scheduled for delivery in early 2025.
Companies like Dubai’s Emirates, Qatar Airways and UAE-based Etihad have historically overshadowed Saudia as the Gulf’s dominant airlines.
The new airline is said to add $20 billion to Saudi GDP and create more than 200,000 direct and indirect jobs.
Mr Bellew stepped down as easyJet’s chief operating officer following last summer’s travel chaos.
He was a top manager at Ryanair between 2006 and 2015 before returning for two years in 2019. His departure to easyJet led the Irish low-cost airline to take legal action against his appointment, claiming he was contractually barred from working for another European airline for 12 months.
A senior US government official said Boeing began talking to the Saudis about three years ago. It was previously reported that the Saudi sovereign wealth fund had held talks with both Airbus and Boeing over the past year.
Saudi Arabia’s Ambassador to the US Princess Reema bint Bandar Al-Saud said the deal with Boeing is part of “a blueprint for economic and social reforms that will open up Saudi Arabia to the world”.
Saudi’s PIF last year was linked to a bid for Ferrovial’s 25 per cent stake in Heathrow. Qatar’s sovereign wealth fund is the second largest investor in the airport, with a 20 percent stake.
US and Saudi officials are trying to restore diplomatic ties after falling to a low over oil policy.
The new airline is part of the Crown Prince’s campaign to diversify the kingdom’s economy and make it less dependent on oil. The country last week agreed to restore diplomatic ties with Iran.