Riyadh, Moscow Agree To Establish Aircraft Leasing Company

 - October 17, 2019, 11:05 AM

In the wake of Vladimir Putin’s visit to Riyadh on October 14 and 15, the Russian Direct Investment Fund (RDIF) and its counterpart in the Kingdom of Saudi Arabia—the Public Investment Fund (PIF)—has established ROAL aircraft leasing company, a joint enterprise also involving the KGAL financial group of Germany. The announcement about the establishment of ROAL came during an October 14 meeting between Putin and Saudi King Salman bin Abdulaziz Al Saud, as they witnessed more than 20 agreements worth $2 billion. RDIF and PIF also made public their decision to invest $600 million in ROAL.

Although the sum appears modest for an aviation leasing business, the sides deemed it sufficient to start business activities with an initial focus on the Russian market. “Using modern airplanes, the Russian airlines will be able to increase the number of air routes and offer higher frequencies," said RDIF in a statement.

Commenting on the move, RDIF CEO Cyril Dmitriev said that, apart from the oil-and-gas industry, Moscow and Riyadh want to expand their cooperation in the technology and investment sector, targeting projects on high-value-added products. Since 2015, RDIF and PIF have prepared a list of joint projects and have approved investments totaling $2.5 billion out of a plan to spend a total of $10 billion. Thus, Dmitriev hinted at the availability of more funds for possible further capital injections into ROAL.

Although the sides haven’t revealed which airplane models they expect to go into ROAL’s portfolio, Russia’s minister for energy Alexander Novak mentioned the Sukhoi SuperJet 100 regional jet and Irkut MC-21 narrowbody as the two primary products Moscow has promoted in the Kingdom.

In another development, Russia’s Utair, acting in cooperation with Marva-Tour, has announced the opening of passenger flights between Makhachkala and Jeddah starting in January. The direct service would be the first between a city in Russia’s South into the Kingdom. Utair said it remains the only Russian airline offering direct charters into Saudi Arabia since it commenced the services seven years ago. Organized to operate during the Hajj, the service saw a 250 percent increase in the number of pilgrims carried this year.

Directly after Riyadh, Putin flew to Abu Dhabi to meet Crown Prince Mohammed bin Zayed Al Nahyan. They met on October 15 for personal meetings and to open the ninth session of the Russo-Emirati inter-government commission. Speaking with journalists after the session’s closure, Russian minister for industry and trade Denis Manturov revealed his government’s interest in cooperating with the Gulf monarchies on a number of aerospace projects. “The sides have expressed a common interest in promoting the following types on the Emirati market: the SSJ100 short-haul and the MC-21 medium-haul airliners, and the Be-200 amphibian,” he added.

Moscow has said it is ready to render assistance to Emirati companies in the development of their own competencies in the aviation domain. “Do we need [foreign] investments? Yes, we do!” Manturov said. “In turn, we can help them develop their competence. This is not going to be a kind of global competence that would enable them to offer a turnkey solution worldwide…And yet, it might enable them to go forward.” Among the ongoing programs to which the United Arab Emirates can make an industrial contribution remains the MC-21 narrowbody jetliner. “They have already erected a superb plant for composites, ” said Manturov, noting the extensive use of the material on the MC-21.