Saudi Carrier Flynas Keen on A350 Deal as Airbus Order Reviewed

Saudi Arabian discount carrier Flynas is keen to renegotiate a deal for 20 Airbus Group NV (AIR) short-haul jets with a view to taking the A350 wide-body model.

While Flynas has terms in place for delivery of the A320s from 2015, the deal was struck before the airline decided to add a long-haul arm, Chief Executive Officer Raja Azmi said.

“We’ll have to start talking soon because nothing is available before 2020 at the earliest,” Azmi said in an interview. Flynas could also seek to swap A320-classic orders for the re-engined and more fuel efficient Neo model, he added.

Flynas 27 leased jets, including three Airbus A330 wide-bodies that will serve eight intercontinental routes three times a week following a roll-out program starting next month. Buying planes outright appeals most at the long-haul unit, with the A350 especially suited to heavy passenger flows likely during the Muslim Hajj and Umrah pilgrimages, Azmi said.

The Saudi airline would need about 60 aircraft to achieve its ambition of carrying 20 million passengers a year by 2020, versus 3.3 million in 2013. Some 40 jets would serve short-haul routes, leaving a requirement for about 20 wide-bodies, he said.

Flynas has held discussions regarding the 787 Dreamliner, Boeing Co. (BA)’s rival to the A350, together with the upgraded 737-800 Max narrow-body, though the A320 order -- which includes 18 options -- makes a revised deal with Airbus more likely, with “significant” down-payments already made, Azmi said in London.

Nigeria, Philippines

The airline will commence intercontinental flights on April 7-8, with services to London, Kuala Lumpur and Jakarta, together with Karachi and Lahore in Pakistan, followed on May 2 by Casablanca in Morocco and Manchester, northern England.

Paris is likely to be the eighth long-haul route, followed by a ninth to India or Pakistan, Azmi said. Future developments envisage flights to China, Nigeria, South Africa and Southeast Asia, where the Philippines ranks high on the roll-out list.

A fourth A330 will join the fleet later this year and the carrier should have six by the end of 2015, adding three a year after that. The first A330s will come with crews from Hi Fly of Portugal, which has five of the planes according to its website.

Flynas rebranded from Nas Air last year after Azmi joined as CEO in June, with the change accompanied by the introduction of a hybrid discount model that features business-class seats in short-haul. For the long-haul operation the carrier will offer 12 premium seats and about 280 in coach -- priced at 999 riyals ($266) return -- plus 40 in a new premium economy class.

“People tell me the jury is still out on low-cost long-haul, but I think there are enough people who want to be able to fly on an economical basis,” said Azmi, who helped set up AirAsia Bhd. (AIRA), Asia’s No. 1 low-cost carrier, in 2001 and later served as CEO of intercontinental division AirAsia X Bhd. (AAX)

Privately owned Flynas has hired Saudi Fransi (BSFR) Capital, together with Deloitte, to advise on an initial public offering, which could come as early as next year, though the carrier must first establish itself as profitable, he said yesterday.

To contact the reporter on this story: Christopher Jasper in London at cjasper@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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