Throughout the last year, airlines have sought various types of economic support from both the private and public sectors; the response from each airline has been diverse around the world, with some companies finding support for immediate liquidity and others finding that the response has not been favorable, having to opt for contingency strategies, such as cutting fleets and dismissal of personnel.
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The news
On 18 March 2021, the airlines Saudia and Flyadeal announced that they jointly secured an agreement with various banks in the country for a subsidy equivalent to 3,000 million US dollars, making the financial deal the largest ever in Saudi Arabia with the airline industry.
HSBC Saudi Bank acted as a representative of the airlines in an agreement with six other Saudi banks: Al Rajhi Bank, Saudi British Bank (SABB), Arab National Bank (ANB), Samba, Bank AlJazira, and Bank Albilad; that HSBC acted as an “endorsement” of the airlines shows the confidence that they have gained thanks to their performance and reaction to the paralysis that air transport is still experiencing today because of restrictions applied to mobility.
Support both in the private and state sectors
The achievement of the agreement shows the support that Saudia and Flyadeal have found in the private sector; however, the authorities of that country have expressed confidence in these companies as a key element of their economy. The Minister of Transport of Arabia Saudi Saleh bin Nasser Al Jasser commented: “This agreement will contribute substantially to the long-term economic growth and development of the Kingdom. The expansion of the Saudi Arabian Airlines Corporation fleet will boost tourism and its allied sectors, generate significant employment opportunities, significantly improve air connectivity and improve the flow of foreign investment, as well as supporting the Kingdom’s efforts to diversify the economy by strengthening the key sectors.”
What will the financed capital be used for?
The intention of the companies has been shared by various means, in which they expressed that the capital will be invested for the acquisition of 73 aircraft pending delivery, which includes twenty Airbus A321 neo, fifteen Airbus A321 XLR, eight Boeing 787-10, and thirty Airbus A320 neo especially for Flyadeal.
Saudia’s fleet
Currently the airline Saudi Arabian Airlines (Saudia), has 158 units in its fleet, the average life of its aircraft is 6.6 years, and includes forty-six Airbus 320 ceo, fifteen Airbus 321 ceo, thirty-two Airbus A330- 300, thirty-five Boeing 777 300 ER, thirteen Boeing 787-9, and five Boeing 787-10.
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