Two Saudi Arabian airlines announced plans on Tuesday to order a combined 78 Boeing 787 Dreamliners, a big win for Boeing (BA.N) that marks the fifth largest commercial order by value in its history.
State-owned Saudi Arabian Airlines (Saudia) and new national airline Riyadh Air will each buy 39 widebody 787s from the U.S.-based planemaker.
The deal contains options for 10 additional Dreamliners for Saudia and 33 for Riyadh Air. Reuters reported details of the planned order on Monday, citing sources.
The list prices for 78 planes would total nearly $37 billion, Reuters previously reported.
Boeing Chief Executive Dave Calhoun said the order showed the huge demand for widebody airplanes around the world as tourism continues to rebound, and is the latest in a series of big 787 orders.
"It's like the biggest I've ever seen," Calhoun said of 787 demand. "The world wants to connect in this post-COVID
Calhoun said the planemaker was standing by its 787 production guidance announced in November, which calls for Boeing to ramp up to 10 787s by the 2025-2026 timeframe.
All customers, "specifically Riyadh Air, are all built into that schedule", Calhoun said. "We have a lot of confidence that we can meet it and that was an important part of this deal."
The Federal Aviation Administration on Friday approved Boeing's plan to resume deliveries of the 787. Boeing shares were up 3.6% in early trading.
The company's clean sweep of the lucrative widebody order is a blow for European rival Airbus (AIR.PA) which as recently as late last year had been expected to secure at least part of the deal. Saudia currently operates both Airbus and Boeing jets.
Richard Aboulafia, an aerospace analyst at AeroDynamic Advisories, said Boeing’s success in capturing the entire order could partially be due to "a greater U.S. presence in the region -- politically, diplomatically, economically".
He added however that "it's also quite likely that the 787 is just closer to their requirements right now".
In particular, the 787 allows for a more flexible route network, as it’s smaller than the A350 but with equivalent range. "That’s probably a big factor in it," Aboulafia said.
Saudi Arabia's Crown Prince Mohammed bin Salman announced on Sunday the creation of new national airline Riyadh Air, with industry veteran Tony Douglas as its chief executive, as the kingdom moves to compete with regional travel hubs.
"We've got a blank sheet of paper," Douglas told Reuters on Tuesday.
Riyadh Air is wholly owned by Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), which has more than $600 billion in assets and is the main driver of the kingdom's efforts to wean itself off oil.
The airline will serve more than 100 destinations around the world by 2030 and will directly compete against Emirates and Qatar Airways.