Saudi Arabian Airlines signs a contract with Airbus to acquire 30 A320 and 20 A330 commercial aircraft through International Airfinance Corporation
Airbus Group (OTCMKTS:EADSY) recently announced that it signed a contract with Saudi Arabian Airlines to deliver 50 aircraft for a total value of $8.2 billion based on the list price. Airbus was in talks with Saudi Airlines since the beginning of the Paris Air Show; the deal has now been finalized.
According to the contract, Airbus will be supplying 30 A320neo aircraft and 20 A330-300 aircraft to Saudi Arabian Airlines. The contract will certainly help Airbus in taking a lead from its rival, Boeing Co (NYSE:BA). However, Saudi Arabian Airlines will acquire the aircraft through Islamic financing. The $8.2 billion deal makes it the largest deal in the aviation industry made through Islamic financing.
Yesterday, Airbus also announced that it is in talks with China to book an order of 50-70 A330-300 commercial aircraft, but the company has not yet finalized a contract. It is believed that the contract will be based on the list price and will be valued at approximately $16 billion.
The International Airfinance Corporation, a Dubai-based Sharia compliant aircraft leasing company, will acquire the aircraft as per the contract and lease the aircraft to the buyer. Currently, Saudi Arabian Airlines operates a fleet of 137 aircraft manufactured by both Boeing and Airbus. With the current order, it now has 80 pending orders, 50 from Airbus and 30 from Boeing.
It was the first time Airbus confirmed the A330 order since the Paris Air Show. The A330 is a long haul commercial aircraft used for domestic and short regional routes. Officials at Airbus supported the current order and remain confident that the company will receive up to 32,600 orders in the next 20 years, and that the recent order supports the company’s long term strategy.
The International Airfinance Corporation has further appointed Palma Capital and Quantum Investment Bank to arrange the deal with Airbus. Airbus is currently ahead in orders as compared to its rival Boeing. Airbus managed to book 421 orders at the Paris Air Show compared to Boeing’s 331. Airbus also exceeded in terms of value as Airbus’ recorded total orders were valued at $57 billion compared to Boeing’s $50.2 billion at the Paris Air Show.