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Riyadh Air and Saudia will purchase 78 Boeing 787 Dreamliner planes under agreements announced Tuesday in a giant order that underlines Saudi Arabia's goal to remake itself as a global aviation hub.
The order -- which could reach as many as 121 planes with options -- constitutes the fifth largest by commercial value in Boeing's history.
The contracts are part of "a blueprint for economic and social reform that is opening Saudi Arabia up to the world," said Reema bint Bandar Al-Saud, Saudi Arabia's ambassador to the United States.
The announcements come after the Saudi Arabia Public Investment Fund launched Riyadh Air just two days ago. Jeddah-based, state-owned Saudia, also known as Saudi Arabian Airlines, dates to 1945 when it received its first jet, a gift from US President Franklin Roosevelt.
Crown Prince Mohammed bin Salman sees aviation as a key component of his "Vision 2030" reform agenda to remake the petroleum-centered country, eyeing a more than tripling of annual traffic to 330 million passengers by the end of the decade.
While Boeing did not provide an estimate of the total value of the order, the White House said it could reach $37 billion.
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The White House hailed the announcement, which comes on the heels of a massive Boeing order announced last month by Air India that together will support over one million US jobs in the 44 states across the aviation supply chain.
"We are particularly pleased that Boeing was able to finally conclude these deals with Saudi Arabia after years of discussions," said White House spokeswoman Karine Jean-Pierre.
"This partnership is another milestone in eight decades of cooperation between Saudi Arabia and American industry."
The deal was also hailed by Republican Senator Lindsey Graham of South Carolina, where the 787 is assembled.
The announcement "solidifies Boeing's presence in Charleston for years to come, and validates the quality of the South Carolina workforce," Graham said in a statement.
Vision for Riyadh
Under the particulars, Riyadh Air agreed to purchase 39 Dreamliners, with options for 33 more jets, while Saudia will buy 39 Dreamliners with options for 10 more.
Riyadh Air characterized the announcement as essential in the new airline's quest to connect Saudi Arabia to more than 100 destinations by 2030.
"Our stated commitment is to create a world-class airline and this partnership with Boeing in building the fleet is the next step in achieving the aspirations of Saudi Arabia as a global transportation hub," Riyadh Air Chairman Yasir Al-Rumayyan said in a news release.
The company also hopes to turn Saudi capital city Riyadh into a regional travel hub to rival Dubai and Doha.
Saudi officials announced in November 2022 plans for a giant new airport in Riyadh, with a hoped-for doubling of Riyadh's population.
Analysts have questioned the feasibility of this aspiration, with some describing the regional market as already "saturated."
Yet the Saudi strategy hinges partly on tapping the domestic market in a country with a population of around 35 million, which officials see as a major advantage for national carriers over rivals Emirates and Qatar Airways.
Saudia currently operates more than 50 Boeing jets in its long-haul network, Boeing said.
The announcements did not specify a date for delivery of the jets.
Faced with increasing orders in a growing travel market, Boeing, like rival Airbus, has struggled to quickly lift production, citing supply chain problems.
Boeing Chief Executive Dave Calhoun told CNBC on Tuesday that "things are getting better," although investors shouldn't expect "any massive improvements."
Besides Boeing, the Saudi contracts also benefit General Electric, which builds engines for the 787.
Shares of Boeing jumped 3.6 percent to $210.63 shortly after midday, while General Electric shot up 4.1 percent to $92.51.
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