Flyadeal confirms Airbus jet order for long-haul expansion

By Tim Hepher

(Reuters) -Saudi budget carrier flyadeal on Wednesday confirmed a deal to order 10 Airbus A330neo wide-body passenger jets as it expands into fast-growing long-haul markets in Southeast Asia.

The sister airline of state-owned national carrier Saudia said it had also acquired purchase rights for a further 10 of the Rolls-Royce-powered planes, also known as A330-900.

The announcement at a ceremony in Toulouse confirms details reported by Reuters in January. The deal - which had previously been listed by Airbus as an unidentified buyer - is worth $1.2 billion after typical discounts, according to estimated delivery price data from UK-based consultancy Cirium Ascend.

Saudi Arabia's aviation sector is expanding as the kingdom invests billions of dollars in its Vision 2030 plan to diversify its economy away from fossil fuels and boost its private sector.

Flyadeal has not yet finalised routes for the jets but plans to target the busy Southeast Asia market - the latest low-cost airline to seek to break into long-haul flying, which has been a tricky bet for some budget carriers due to complexity and cost.

"I can pretty well guarantee that it's going to be Southeast Asia - Indonesia, Thailand, Malaysia or the Philippines," flyadeal CEO Steven Greenway told Reuters of the planned route expansion.

The airline will also be able to carry more passengers into congested regional markets, such as Dubai.

Greenway, a former senior executive at Singapore Airlines subsidiary Scoot, has said flyadeal aims for 100 jets by 2030.

NO TRADE IMPACT

In service since 2018, the A330neo is an upgraded version of the long-haul A330. It has room for well over 400 seats in the dense layouts used by the Southeast Asian carriers that flyadeal is likely to compete with, such as Cebu and Lion Air.

Flyadeal plans to include some premium economy-type seats.

Greenway said Flyadeal had also looked at Boeing's newer 787-9 as well as the possibility of redeploying seven larger 777s held by Saudia.

The 787-9 has lower capacity in dense layouts and has a longer waiting time for delivery, while the 777 mini-jumbo would be harder to fill due its size, Greenway said. Flyadeal also needs a minimum of 10 aircraft to run its network efficiently.

A330neo deliveries will start in July 2027.

Greenway said Airbus narrow-body operator flyadeal had not been affected by trade tensions given its mainly domestic focus.

"We still have fairly robust conditions in the Middle East as a whole," he said, adding, "I'm expecting summer to be robust".

A more pressing concern is any significant fluctuation in oil prices and their impact on the economy.

"At the moment, things are steaming ahead. I don't really see anything that flags (problems) for me in terms of demand or the robustness of travel at the moment," Greenway said. 

(Reporting by Tim Hepher. Editing by Jane Merriman, Jan Harvey and Tomasz Janowski)