Saudi Arabia is in advanced negotiations to order almost 40 A350 jets from Airbus (AIR.PA) as part of a broader, multi-billion-dollar drive to launch a new airline and challenge heavyweight carriers in the Gulf, industry sources said.
There is no guarantee of a deal but if confirmed, the purchase by the sovereign Public Investment Fund (PIF) could be announced as early as this week when Riyadh hosts a major forum, the Future Investment Initiative (FII), the sources said. A final decision on the proposed deal, worth around $12 billion at list prices, depends on political approval at the highest level, with Boeing also lobbying for a slice of the expansion despite a chill in U.S.-Saudi relations, sources said.
One source familiar with the negotiation for the new airline, provisionally named "RIA", cautioned that it was "not over yet".
Neither France-based Airbus nor Boeing (BA.N) had any comment. PIF did not respond to a request for comment. Industry sources said Boeing remained confident of winning at least part of a total requirement for around 68-75 jets via its Boeing 787 Dreamliner, already in use at state-owned Saudia.
Reports have said that the new airline may also need smaller narrow-body jets.
Reuters first reported in August that Saudi Arabia was discussing a significant order for wide-body jets.
Bloomberg News reported on Sunday that any deal could involve up to 80 aircraft.
The strategically important potential deal is among the economic topics in focus ahead of the FII forum, taking place under the shadow of tensions between Washington and Riyadh.
The FII is a showcase for Crown Prince Mohammed bin Salman's Vision 2030 plan to diversify from oil by fostering new industries that generate jobs and lure foreign capital.
