Riyadh Air, an airline operated by the Saudi Arabian Sovereign Wealth Fund, has announcedits first agreement with the American Boeing Corporation for the production of 72 aircraft. The implementation of this deal may be tied to Ukrainian titanium deposits and, under favourable conditions, would help Saudi Arabia get off the oil needle. Mind explains why and how.
What does the deal entail? According to Riyadh Air, the agreement with Boeing "is a part of Saudi Arabia's wider strategic plan to transform the country into a global aviation hub". In total, the kingdom's national carriers intend to purchase "up to 121 Dreamliner-787s" from the American airline corporation, and this will be "the fifth largest commercial order in Boeing's history by value".
How much money is involved? Preliminary estimates suggest that the contract between Riyadh Air and Boeing is worth at least $35 billion. According to The Wall Street Journal, the options for the agreement may change, and the Saudis may purchase even more aircraft in the future.
Why do the Saudis need it? The development of Riyadh Air is one of the cornerstones of the strategy of the Saudi Arabian Sovereign Wealth Fund and the Vision 2030 programme launched by Crown Prince Mohammed bin Salman to reduce the Kingdom's dependence on oil exports and diversify the economy.
The fund officially announced the creation of the airline on Sunday, 12 March. "The new national carrier will leverage Saudi Arabia’s strategic geographic location between the three continents of Asia, Africa and Europe, enabling Riyadh to become a gateway to the world and a global destination for transportation, trade, and tourism.," the statement said.
How will the deal be executed? Riyadh Air is headed by Yasir Al Rumayan, the head of the Sovereign Wealth Fund. British businessman Tony Douglas, who also has experience in top positions at the UK Ministry of Defence and Heatrhrow Airport, was appointed CEO of the airline.
Earlier, Riyadh officials said that strengthening the national aviation industry would help Saudi Arabia become a global business centre and compete with other Gulf airlines.
In April 2022, Saudi Arabian Military Industries (SAMI) announced a preliminary agreement with Boeing to establish a joint venture. SAMI CEO Waleed Abouhaled said at the time: "As we move towards realising our Vision 2030 ambitions to strengthen the defence industry, our long-standing relationships with industry leaders such as Boeing will contribute to our success. We also see this joint venture as the first step in a broader strategic partnership between Boeing and SAMI that will include additional platforms and services in the future."
How will this deal affect other countries? For several months, American Boeing and Dutch Airbus have been competing for the aircraft production deal with Saudi Arabia, the WSJ reports.
"The Boeing deal will come amid recent signs of easing tensions and increased cooperation between the Biden administration and the Saudi government," the American business newspaper announced on the eve of the official confirmation of the contract.
Boeing's victory is expected to "create tens of thousands of jobs in the United States". It is very likely that Ukraine will also benefit from this.
What is in it for Ukraine? As reported by Mind, russia's war against Ukraine has provoked a global redistribution of international influence that has affected leading sectors of the economy. Among them are the energy and defence sectors, which are closely interconnected.
In particular, the use of titanium plays a key role in the development of advanced military technologies. This metal is also used in the construction of civilian aircraft and in the production of blades for steam turbines.
"Ukraine has really significant deposits of rare earth minerals, which could actually be a really attractive alternative to russian and Chinese sources, which is where a lot of dependency currently is. If Ukraine wins, the U.S. and its allies will be in pole position to cultivate a new conduit of titanium. But if russia manages to seize the country's deposits and plants [realted to the titanium production], Moscow will boost its global influence over increasingly strategic resource.
russia's aggression against Ukraine has created the preconditions for the unique deposits of strategic metals in our country to be freed from russian influence.