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Saudi Arabia and Boeing announce massive aircraft deal

Flush with a windfall of oil revenue, Saudi Arabia is positioning itself as a travel and tourism hub for the region
Employees work on Boeing 737 MAX airplanes at the Boeing Renton Factory in Renton, Washington, on 14 March 2019 (AFP)

Two Saudi airlines announced the purchase of almost 80 Boeing 787 Dreamliner planes in a giant order that underlines Saudi Arabia's goal to remake itself as a global aviation and tourism hub.

The order, which could reach as many as 121 planes with options, constitutes the fifth largest in commercial value in Boeing's history.

Thirty-nine Dreamliners are set for Riyadh Air, the kingdom’s government-backed airline startup, which has reserved an option to purchase 33 more of the wide-body jets in the future. Saudi Arabian Airlines, or Saudia, the country’s existing flagship airline, will purchase 39 Dreamliners, as well as options to buy 10 more.

The contracts are part of "a blueprint for economic and social reform that is opening Saudi Arabia up to the world," said Reema bint Bandar al-Saud, Saudi Arabia's ambassador to the United States.

The announcements come after the Saudi Arabia Public Investment Fund launched Riyadh Air just two days ago. The startup is part of Crown Prince Mohammed bin Salman’s plan to boost the kingdom’s clout as a tourism and travel hub.

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The crown prince is pushing through some social reforms designed to remake the conservative monarchy into a travel destination, even as he pursues a severe crackdown on dissent.

Flush with cash from an oil boom, Saudi Arabia is building a $500bn megacity along the Red Sea coast. In November, Saudi Arabia announced plans for a new airport in Riyadh capable of eventually receiving 180 million passengers a year.

Under "Vision 2030,” a reform agenda designed to wean the country off its reliance on fossil fuels, Saudi Arabia aims to more than triple its annual traffic to 330 million passengers by the end of the decade.

While Boeing did not provide an estimate of the total value of the order, the White House said it could reach $37bn.

The White House hailed the announcement, which comes on the heels of a massive Boeing order announced last month by Air India, which together will support over one million US jobs in the 44 states across the aviation supply chain.

"We are particularly pleased that Boeing was able to finally conclude these deals with Saudi Arabia after years of discussions," said White House spokeswoman Karine Jean-Pierre.

"This partnership is another milestone in eight decades of cooperation between Saudi Arabia and American industry.”

The deal carries symbolic weight. Saudi Arabian Airlines was established in 1945, when it received its first jet as a gift from then-US President Franklin Roosevelt.

The deal underscores the US’s continued economic clout in the Gulf, despite Saudi Arabia’s efforts to set off a more independent foreign policy path. On Friday, the kingdom agreed to re-establish ties with Iran as part of a watershed agreement brokered by Washington’s main global rival, China.

Saudi Arabia is bringing its deep pockets into a crowded regional transportation field. Both Qatar and the UAE have used their national airlines to position themselves as travel and tourism hubs.

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