Saudia Repair Arm Aims to Be Mideast No. 1 After Lufthansa Tieup

  • SAEI says third-party work could grow to 40% of total
  • Maintenance unit also targeting more military repairs

Saudi Arabian Airlines is aiming to swell third-party sales at a maintenance arm it’s building into the biggest in the Middle East after securing a tie-up with the repair and overhaul division of Deutsche Lufthansa AG.

Saudi Aerospace Engineering Industries, which counts Qatar Airways among more than 25 airline clients, is in talks to add carriers including local discounters Saudi Gulf Air and Al Maha Airways, according to Director General Nasser Al-Jasser, who said outside work could reach 40 percent of the total.

SAEI plans to lift the value of its contracts to 8 billion riyals ($2.13 billion) from 5.3 billion riyals after opening a new 1 million square-meter facility at Jeddah airport by the end of next year, Al-Jasser said in an interview at the Dubai Air Show. Aircraft, engine and component overhaul will all be on offer.

“Domestic airlines that are coming up, we are definitely targeting those,” Al-Jasser said. “What we will focus on is maintaining airline spare parts, which is huge, more than maintaining airframes. I think the market is under-served.”

GE, Airbus Goal

SAEI already has support contracts with Boeing Co. and Lockheed Martin Corp. and wants to secure deals with General Electric Co. and Airbus Group SE in the next year or so, according to Al-Jasser, who said sales are likely to grow by about 5 percent a year. The backlog with its parent airline, known as Saudia, stretches to about seven months.

The venture with Lufthansa Technik, the world’s biggest aircraft-maintenance company, will see the German business supply components for Saudia’s fleet of Airbus A320 and A330 jets while helping SAEI to develop overhaul capabilities on Airbus and Boeing models. It will also use SAEI as a subcontractor for those parts the Saudi company already holds.

SAEI is also targeting an increase in overhaul work for the Saudi military, which has a potentially “huge” requirement, he said. Saudi Arabia has the largest defense budget in the Middle East and is engaged in a war in Yemen.

The Jeddah maintenance facility, costing 3.5 billion riyals and developed in a joint venture led by Turkey’s TAV Havalimanlari Holding AS and including Al Habtoor Leighton Group and Al Rajhi Construction, is about 70 percent complete, said Abdulmohsen Aynousah, SAEI’s director of sales and marketing.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE