Saudi Airlines Seals $1.87 Billion Loan to Acquire 17 Planes

Saudi Arabian Airlines said it signed a 7 billion-riyal ($1.87 billion) loan deal to fund plane deliveries central to fleet modernization and a new focus on international routes.

The accord, which will finance 17 aircraft due to arrive over the next three years, is with a group of banks led by Saudi Arabia’s Samba Financial Group, Khalid bin Abdullah Al-Molhem, the airline’s director general, said today in Dubai.

The carrier, known as Saudia, has 20 aircraft left for delivery from 90 ordered in the past six years, and will need 100 planes through 2020 to meet growth plans, according to Al-Molhem, who said the company shares the ambitions of Gulf operators such as Emirates in seeking to boost long-haul links.

“There is growth of traffic worldwide like a flood,” he said at a press conference. “Who is investing today? Not the Europeans, it’s the Middle East. It has faster decision-making and is buying planes more quickly.”

Saudia aims to build a “strong hub” in Jeddah while tapping a large domestic market that leading Persian Gulf airports in Dubai, Doha and Abu Dhabi lack, Al-Molhem said.

Of the 25 million passengers carried by Saudia last year, some 15 million were at 27 domestic airports, a figure the executive said could almost double by the end of the decade.

Still, the carrier plans to rethink its short-haul operations to reflect the impact of new domestic rivals such as Saudi Gulf and Qatar Airways Ltd.-owned Al Maha Airlines.

“We are working with the authorities to restructure those routes with more carriers to come in,” he said, adding that devoting resources to the domestic network curbs the company’s ability to chase more profitable international traffic.

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