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Abu Dhabi, UAEMonday 18 June 2018

Saudi Arabia’s flyadeal to decide by mid-year on 50 plane order

Low-cost carrier in early talks with Airbus, Boeing to choose either A320 Neos or 737 Maxs

It launched domestic flights in September and plans to serve regional destinations in the second-half of the year. AMER HILABI.AFP
It launched domestic flights in September and plans to serve regional destinations in the second-half of the year. AMER HILABI.AFP

Saudi Arabia’s state-owned budget carrier flyadeal expects to make a decision by mid-year to choose between placing a 50 aircraft order for Boeing 737 Max or Airbus A320 Neo, its chief commercial officer said on Sunday.

The airline, which launched last year, is in early talks with both manufacturers and is “several months away” from making a decision between the two models, Sudeep Ghai, told The National. It will consider a bridge order of leased planes if the delivery backlog is too long.

“A decision is targeted for the middle of the year,” Mr Ghai said. “The challenge for us will be that the delivery pipeline is fairly congested at the moment so we probably have to go to the market and get some interim leased aircraft."

The airline, the low-cost subsidiary of Saudi Arabian Airlines, currently operates a fleet of six leased Airbus A320s and will have eight planes by summer. It launched domestic flights in September and plans to serve regional destinations in the second-half of the year.

Flyadeal competes with Riydah-based budget carrier Flynas, which began operating in 2007 and is partly owned by Kingdom Holding, the investment vehicle of Saudi Prince Alwaleed bin Talal. Regionally, flyadeal will compete with the Sharjah-based low-cost carrier Air Arabia, flydubai and Kuwait’s Jazeera Airways.

The order of 50 narrow-body aircraft would cover the airline’s fleet requirements for the next five years, for both domestic and regional routes, Mr Ghai said.

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The continuing problems that Airbus has faced with its Neo engines has not deterred the airline and flyadeal will not exclude the European manufacturer from the race with its US rival for that order.

“We’re aware of it and obviously paying attention to it, but it hasn’t fundamentally transformed our thinking at this point in time,” he said.

If the airline faces a long delivery backlog with its chosen manufacturer, it may lease aircraft of the same type to bridge the gap between the order and delivery time.

“Under the assumption that we make a decision around the middle of this year, I think we’d be looking to lease either back-end of this year or first-half of next year,” he said.

Flyadeal would not reveal the number of leased aircraft but they would be “as few as possible” and declined to reveal which lessors it was in conversation with. It has leased its current fleet from Dubai Aerospace Enterprise, which is majority owned by the Investment Corporation of Dubai, the emirate's sovereign wealth fund.

The airline plans to open two new domestic routes and aims to be profitable within the next five years, Mr Ghai said.