Saudi carrier wants to service long-haul destinations as it prepares to go public
Exclusive: Flynas to launch talks with Boeing and Airbus for wide-body jets
Saudi Arabian low-cost carrier Flynas plans to operate wide-body aircraft for the first time in its 10-year history as part of a network expansion strategy that could see the airline service long-haul destinations such as Kuala Lumpur, Jakarta, Europe and Africa, its group chief executive said.
The airline is to commence talks with plane manufacturers Boeing and Airbus within the next two months with a view to placing a sizeable order for either Boeing 777s or Airbus A330s, plus Airbus’ long-range A321-ER neo, Bander Almohanna told The National on Monday.
“We are starting now to study long-range A321-ER neos and wide-body jets – we’ll either go with A330 or B777,” Mr Almohanna said.
“We will launch in the next couple of months a campaign for wide-body jets, targeting destinations that cannot be reached by the existing equipment [fleet]. So this would be mainly the Far East – Jakarta, Kuala Lumpur –the far West, and Africa.”
If a deal is reached, it is expected to be for a similar number of aircraft as Flynas’ order placed at the end of 2016 for 120 A320neos, which is due for delivery between the fourth quarter of 2018 and 2026 and intended to replace its outdated fleet of 30 aircraft, predominantly A320s. “We always think big,” Mr Almohanna told The National at the ATM travel conference in Dubai.
Operating wide-body aircraft would be a wholly new strategy for the low-cost carrier as it seeks to grow its network in line with the kingdom’s plans to develop its nascent tourism sector.
“The market size of Saudi Arabia is more than the airline so we are not competing with [national carrier] Saudia, we are complementing it by trying to reach markets not served well by any Saudi airline, and to get people to come direct instead of through connecting traffic,” Mr Almohanna said.
The discussions with Airbus and Boeing is a new project, he said, “but our whole strategy is to get aligned with Vision 2030”, which sets a target to attract 15 million pilgrims by 2020, and 30 million by 2030.
“Those pilgrims will not be able to come in a convenient way without having an airline like Flynas pushing a strategy, frankly, to have wide-body aircraft and long-range 777-ER Max or the A321neo.” Pilgrims are only one segment of Flynas’ target market, he said.
Boeing’s under-development mid-size jet is another option.
Flynas, which is partly owned by Prince Alwaleed bin Talal’s Kingdom Holding, forecasts 10 per cent earnings growth this year after a flat 2016/17 due to sluggish conditions in the regional economy and the wider aviation industry, according to Mr Almohanna. He said the market is “starting to pick up”.
The airline is targeting an increase in passenger numbers to 7.5 million in 2018 from 6.4 million in 2017, helped by an anticipated 5 per cent rise in Umrah and Haj pilgrims to the kingdom this year.
This summer it will launch five new destinations – Tbilisi in Georgia, Baku in Azebaijan, Vienna in Austria, Athens in Greece and Trabzon in Turkey. Flights will commence for sale this week.
To facilitate the network expansion, the carrier is in discussions with Airbus to fast-track a portion of its A320neo order, Mr Almohanna said. He plans to add five new aircraft to Flynas’ fleet this year, including two A320s and three Boeing 737s.
“We are negotiating with Airbus to advance more than what the slot has given to us,” he said. “We are also in talks with other lessors to maybe swap their slot with ours to accelerate the planned replacement and support our growth strategy.”
Mr Almohanna declined to comment on the planned initial public offering of around 30 per cent of the company, reportedly targeted for early 2019. The plans are still on the table, he said. Flynas was reported in February to have appointed Citigroup to advise on a potential IPO, alongside Morgan Stanley and NCB Capital.