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New Saudi airline in $2 billion deal for Bombardier planes

Bombardier's CSeries aircraft lands after its first test flight in Mirabel, Quebec September 16, 2013. REUTERS/Christinne Muschi
Bombardier's CSeries aircraft lands after its first test flight in Mirabel, Quebec September 16, 2013. REUTERS/Christinne Muschi

By Rania El Gamal

MANAMA (Reuters) - Saudi Gulf Airlines, a new carrier born of the deregulation of Saudi Arabia's aviation market, has signed a $2 billion deal with Canada's Bombardier Inc to buy 16 CSeries jets with options for 10 more, the airline's owner said on Thursday.

The deal is a boost for Bombardier, which has so far seen slow orders for the CSeries after several months of development delays, with potential customers waiting for flight test data to confirm fuel and cost saving claims.

Delivery of the CS300 jets, which seat between 130 and 160 passengers, is expected between the end of 2015 and the start of 2016, said Samer al-Magali, president of the Abdel Hadi al-Qahtani group.

Dammam-based Saudi Gulf is expected to start operating later this year or next year, Magali told reporters at the Bahrain International Airshow, saying the $2 billion referred to the list price for the planes and options.

The group is ready to buy or lease around six other planes until the CSeries jets are delivered, he added.

"Saudi Gulf will be launched once we have the technical licence from the civil aviation authority," said Magali, a former chief executive of Bahrain's national carrier Gulf Air

.

Saudi Arabia started opening up its aviation market in 2012 by awarding additional carrier licences. Population growth and rapidly rising incomes mean there is considerable room for expansion, analysts believe.

Currently, only national carrier Saudi Arabian Airlines and budget airline National Air Services serve a domestic market of about 27 million people. Foreign carriers can only fly in and out of Saudi Arabia, not within the country.

The Bombardier order will initially be funded by the al-Qahtani group but the main funding will come from lenders, Magali said without elaborating. The planes will be used within Saudi Arabia and the region.

The CSeries is a narrow-body jetliner aimed at competing with the smaller planes built by aerospace giants Boeing and Airbus .

Bombardier has said it expects to have 300 firm orders by the time the CSeries boards its first commercial passenger, currently slated for next autumn.

(Writing by Andrew Torchia and Sylvia Westall; Editing by Jason Neely and Mark Potter)

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