Rolls-Royce will take longer than expected to fix problems with its Trent 1000 engine, frustrating efforts to get Boeing 787s grounded by the glitch flying again and knocking the British company’s shares.
Rolls-Royce, whose engines power large civil and military planes, said on Friday it had sped up turbine blade replacement for some models, leading to additional removals and delaying a reduction in the number of grounded aircraft to single figures until the second quarter of 2020.
The company faces £1.6 billion ($2 billion) in extra costs and disruption as a result of the engine problem, which is due to the poor durability of components, and the latest delay spells further frustration for its customers and investors.
Rolls-Royce, whose customers include more than 400 airlines, 160 armed forces and 70 navies, said in August that it would spend another £100 million to fix the issue.
“We perceived a risk that further action would be required, potentially leading to higher costs being incurred ... today’s announcement that guidance for the Trent 1000 cash costs in 2019 and 2020 remains unchanged comes as a relief,” Jefferies analysts, who rate the stock as “buy,” said.
Rolls-Royce CEO Warren East said in August that a target of fewer than 10 aircraft on the ground at the end of the year might take a bit longer to achieve as a result of an additional repair load resulting from faster deterioration of a blade on the Trent 1000 TEN.
The Trent 1000 TEN is the latest version of an engine that has had a problematic entry into service. As of late February, Rolls said 35 787s were grounded globally due to engine blades corroding or cracking prematurely.
“We deeply regret the additional disruption that this will cause our customers and we continue to work closely with them to minimize the impact on their operations,” Rolls-Royce said.
Airlines have faced disruptions because of the groundings, with Norwegian Air’s strategy switch to prioritize profits over growth hampered by the global grounding of Boeing’s 737 MAX aircraft and long-running problems with Rolls-Royce’s engines on Boeing Dreamliners.
Singapore Airlines has also grounded two 787-10 jets fitted with the Trent 1000 TEN engines.
Rolls-Royce is keen to avoid further problems with the engine and in March dropped out of the race to power Boeing’s planned mid-market aircraft.
Rolls-Royce hit by further setback to fixing Boeing 787 engines
Rolls-Royce hit by further setback to fixing Boeing 787 engines
- The company faces £1.6 billion ($2 billion) in extra costs and disruption as a result of the engine problem
- As of late February, Rolls said 35 787s were grounded globally due to engine blades corroding or cracking prematurely
PIF-owned Soudah Development sets sustainability as core of vision for Saudi luxury destination
RIYADH: Soudah Development, a company backed by the Public Investment Fund, is placing sustainability at the core of its plan to transform Saudi Arabia’s southern region into a premier ultra-luxury destination.
The company's commitment to ecological preservation and long-term climate resilience was highlighted at COP16 in Riyadh.
Speaking to Arab News on the sidelines of COP16 in Riyadh, Srdan Susic, chief destination sustainability, highlighted the company’s approach to integrating environmental concerns with development goals. “We believe that without nature, you don’t have the people. Without people, you don’t have heritage. Without nature, without heritage, you don’t have a destination that we want to build,” he said.
Soudah’s sustainability strategy includes proactive climate adaptation, ecosystem restoration, and rewilding. To date, the company has planted nearly 250,000 native trees, with a goal of one million by 2030. In addition, flagship species have been reintroduced into protected areas to promote natural recovery.
“We want our ecosystems to continue providing ecosystem services for the communities who live there and for future visitors,” Susic added.
The company is also focused on preparing for the long-term challenges of climate change. “Climate change adaptation is a process where you say there is climate change, there are going to be negative effects. Let me get as better prepared as I can for the future to mitigate these effects,” Susic explained.
He emphasized that this approach would not only ensure sustainability but also enhance operational efficiency and financial viability.
“Our hotel and other asset operators will be more willing to come to us because we are aware of our sustainability goals. Our insurers, the companies who will insure our assets for the next 40, 50, or 60 years of operation, will charge us less money because we know what the risks are and how to mitigate them.”
Located at 3,015 meters above sea level, the Soudah Development project will feature 3,000 ultra-luxury hotel rooms, villas, and second homes, along with retail and infrastructure developments.
It is expected to create jobs and provide new economic opportunities for local communities. “Soudah is very proud that we are a very important part of this vision and that we are helping to reduce the oil dependency of this country,” Susic said.
Partnerships and future plans
The company is finalizing several memoranda of understanding with government entities and a royal commission, aimed at supporting reforestation efforts and increasing the region’s biodiversity.
One such agreement, with the Saudi Coffee Co., will involve planting coffee trees to boost both the local environment and the economy. “The agreements Soudah is planning to sign by the end of the year are very implementable, very efficient, and very precise,” Susic noted.
Soudah Development’s efforts align with Saudi Arabia’s broader economic diversification goals. “We believe that Saudi Arabia is doing a big shift in its economic planning for the next generation to come,” Susic said.
With a focus on tangible outcomes, Soudah Development aims to lead by example. “If you read our sustainability reports, you will see that we use past tense — we have done a lot,” Susic said.
As COP16 highlights global sustainability initiatives, Soudah Development’s work underscores how luxury destinations can be developed while preserving nature and supporting local communities.
Venture capital, banking key to driving sustainable finance
RIYADH: Venture capital and the banking sector are key to advancing innovative solutions for environmental sustainability, according to the founder and CEO of KBW Ventures.
During a session titled “Redefining Sustainable Finance: From Competitive to Catalytic Impact,” on the second day of the fourth Saudi Green Initiative Forum in Riyadh, Prince Khaled bin Alwaleed explained the role of impact investing and how it is scalable, sustainable, and profitable.
This falls in line with the fact that sustainable finance is evolving from a competitive advantage to a catalyst for systematic change. With global environmental, social, and governance assets expected to reach $50 trillion by 2025, the focus is shifting toward driving large-scale impact.
“Venture capital is not competitive to traditional banking sector. The banking sector loves venture capital because they de-riskify concepts that haven’t been developed yet,” Prince Khaled said.
“Really, it’s a marriage of different types of industries coming together harmoniously, and venture capital and banking complement each other really well,” he added.
The CEO went on to say: “For me personally, impact investing really plays a huge role, simply because it reflects a lot on the investor’s desire for financial return as well as being in fact positively impacting the environment, whether it’s people, whether it’s the environment, whether it’s social responsibility,” he added.
Prince Khaled also highlighted how venture capital is at the forefront of investing in ideas that haven’t yet materialized, bearing much of the risk in the process.
“Venture capital comes in and de-riskify these opportunities. And to fuel the growth and to fuel the scale, banks come in and feel that scale once the proven model is there once there’s profitability, once there’s product market fit,” he said.
The founder also shed light on how impact investing is yet to develop in the region.
“We’ve seen investing, but impact investing is starting to grow. We’ve seen that in the last three to four years, we haven’t seen much happening in that field, but it’s slowly going to happen simply because investors dictate ESG-driven models have to be implemented in certain companies or even in certain startups,” Prince Khaled said.
He also highlighted that policies don’t drive innovation; rather, innovation drives innovation.
“Blanket policies don’t necessarily translate really well internationally or worldwide. They work in a specific manner, and they have to be tailored for other areas in the world. And again, this is why I believe policy doesn’t necessarily dictate change. I think the market, I think innovation, I think private sector really dictates the way change is going to happen,” the CEO concluded.
This year’s edition of the Saudi Green Initiative Forum, held from Dec. 3-4 as part of COP16, aims to tackle pressing global environmental challenges, such as land rehabilitation, carbon reduction innovations, and sustainable financing. The gathering will also explore the role of natural solutions in helping communities adapt to climate change while emphasizing efforts to preserve the Kingdom’s rich biodiversity, according to an official statement.
Saudi Arabia’s economic diversification fuels 4.4% growth forecast for 2025: ICAEW
RIYADH: Saudi Arabia’s economy is forecast to grow 4.4 percent in 2025, driven by strong non-oil sector momentum and easing oil production cuts, according to the projections.
The Institute of Chartered Accountants in England and Wales highlighted that this marks a rebound from the 1.4 percent growth expected in 2024, supported by a 5.8 percent increase in the non-oil sector.
Similarly, the Organization for Economic Co-operation and Development projects Saudi Arabia’s gross domestic product growth at 3.6 percent in 2025 and 3.8 percent in 2026.
ICAEW emphasized the non-oil sector as a key growth driver across the Gulf Cooperation Council, with industries like tourism, real estate, and finance at the forefront.
Regional outlook
GCC economies are expected to grow at an annual rate of 4 percent over the next five years, more than double that of advanced economies.
Scott Livermore, ICAEW’s economic advisor, said: “The GCC’s projected 4 percent growth in 2025 highlights the success of the region’s diversification efforts amid global challenges.”
He added: “Managing capacity constraints in these high-growth sectors and navigating global uncertainties will be critical to sustaining long-term economic stability.”
Strong investments in construction, tourism, and infrastructure, coupled with rising oil production from 2025, are anticipated to bolster growth.
Saudi Arabia’s economy is undergoing a significant transformation, with Vision 2030 spearheading efforts to reduce oil dependence and diversify economic activities.
Reforms, including regulatory changes and infrastructure investments, are strengthening non-oil industries and attracting both domestic and foreign investments. This transformation is positioning the Kingdom for long-term economic stability, supported by growing oil production and a thriving non-oil sector.
The GCC region is also projected to experience robust growth, driven by government-led diversification initiatives that are accelerating economic expansion.
According to an ICAEW report, the regional Purchasing Managers’ Index remains in expansionary territory, indicating sustained momentum in non-energy sectors. This growth is expected to result in a 4 percent expansion in industries such as tourism, real estate, and finance in both 2024 and 2025.
These developments highlight the successful implementation of strategies aimed at reducing oil dependence and fostering sustainable, diversified economic growth across the region.
Oil production recovery
ICAEW projects that Saudi Arabia’s oil production will rise by 3.4 percent in 2025, recovering from 2024’s production cuts, which reduced output to around 9 million barrels per day.
This rebound is expected to boost GDP growth in oil-dependent economies such as Kuwait and Oman. However, the region faces challenges from the global shift toward cleaner energy and the development of renewable projects, which add complexities to long-term oil strategies.
OPEC+ members, including Saudi Arabia, have been withholding a combined 5.86 million barrels per day of oil output — around 5.7 percent of global demand — through a series of cuts initiated in 2022 to stabilize the oil market.
OPEC+ is scheduled to meet on Dec. 5, with expectations of extending the current output cuts until the end of the first quarter of 2025 to maintain market support.
Inflation and interest rates
ICAEW anticipates that interest rates in the GCC, which have been aligned with the US Federal Reserve’s monetary policy, will continue to ease into 2025.
After two years of aggressively tightening monetary policy to combat inflation, GCC countries lowered rates by 50 basis points in September and 25 basis points in November.
While this easing of interest rates is expected to stimulate lending, it has also contributed to rising real estate prices, as lower borrowing costs make it easier for individuals and businesses to secure financing.
However, the effects on the real estate market and corporate lending have been mixed. The lower rates have fueled increased demand, particularly in major cities like Riyadh, which has led to higher property prices and rents.
In Saudi Arabia, rental prices have been a key driver of inflation, particularly as the growing population and urbanization have intensified the demand for housing. As a result, inflation is forecast to rise from 1.7 percent in 2024 to 2.3 percent in 2025, with rents expected to remain a significant contributor, according to ICAEW.
State Street Global Advisors forecasts a “soft landing” in 2025, with the economy growing gradually without a sharp downturn, balancing inflation control with sustainable growth. This scenario aims to avoid major negative impacts such as high unemployment or a sharp decline in consumer spending.
Debt levels and fiscal flexibility
Saudi Arabia’s budget deficit is projected to persist, with ICAEW estimating a shortfall of 2.8 percent of GDP in 2024. However, the country's low government debt levels provide flexibility to fund key Vision 2030 initiatives and infrastructure projects.
The Kingdom’s 2025 budget, approved in early November, forecasts revenues of SR1.18 trillion and expenditures of SR1.28 trillion, resulting in a deficit of SR101 billion.
These deficits are within manageable, planned levels, strategically designed to support the government’s expansionary spending on key projects aimed at diversifying the economy.
Saudi Arabia also maintains a strong credit rating from international agencies, reflecting its fiscal stability and investor confidence, which bolsters its capacity to finance these expansionary projects.
Across the GCC, most countries are expected to maintain manageable debt levels, with sovereign wealth funds and other financial tools helping bridge budget gaps.
According to State Street Global Advisors, the GCC’s economic diversification efforts have led to a significant increase in fixed income issuance, with outstanding bonds surpassing $1.35 trillion by September, more than tripling since 2019.
Notable growth in local currency bonds, sukuk, and green bonds reflects the region’s commitment to economic diversification and sustainability.
GCC bonds have outperformed the broader JP Morgan EMBI Global Diversified Index, offering lower volatility and drawdowns compared to other emerging market bonds, making them attractive to investors, according to their report.
Capital market expansion
The GCC is undergoing a significant transformation in its capital markets, with Saudi Arabia at the forefront.
According to State Street Global Advisors, GCC equities have outperformed the broader emerging markets index over the past decade, despite global challenges. This outperformance is attributed to the region’s economic resilience and successful diversification efforts.
GCC equities also exhibit low correlation with oil prices and both developed and emerging markets, offering distinct sectoral exposure. The stability of dollar-pegged currencies further reduces currency risk, making GCC equities an attractive investment in volatile global markets.
Saudi Arabia’s stock market has grown to become the seventh-largest globally, reflecting the strength of the real economy.
Key reforms in the sector, including new regulatory frameworks, have increased liquidity and market accessibility.
Saudi Arabia’s inclusion in the MSCI Emerging Markets Index and the expansion of local equity offerings have been pivotal milestones. Additionally, the introduction of sukuk and green bonds has diversified the investment landscape, drawing international investors.
The ongoing integration of Saudi capital markets with global markets, coupled with Vision 2030 reforms, has positioned the Kingdom as an attractive destination for international investors, signaling a shift toward greater economic diversification and sustainability.
Saudia teams up with Air France-KLM to strengthen local MRO services
- Partnership demonstrates shared commitment to advancing Kingdom’s aviation sector
- Air France-KLM revealed plans to expand its presence in Saudi Arabia
JEDDAH: The Kingdom’s national carrier, Saudia, has entered into a strategic partnership with Air France-KLM to expand and localize its maintenance, repair, and overhaul capabilities. This collaboration aims to enhance the Kingdom’s aviation infrastructure and contribute to its economic growth.
The agreement was formalized during a signing ceremony on Dec. 3, which was attended by French President Emmanuel Macron, Saudi Arabian Airlines Corp. Chairman Saleh Al-Jasser, Saudia Group Director Gen. Ibrahim Al-Omar, and several other dignitaries and ministers, as per a statement from Saudia.
Al-Omar said the partnership is in line with Saudi Arabia’s Aviation Strategy, led by the General Authority of Civil Aviation, and demonstrates a shared commitment to advancing the country’s aviation sector.
Benjamin Smith, the CEO of Air France-KLM, highlighted the long-standing relationship between Saudia and the Air France-KLM Group, noting: “In the context of Saudi Arabia’s rapid development, we see great mutual benefit in expanding our commercial cooperation and combining our expertise, especially in the strategic area of MRO services.”
He added that Air France-KLM Engineering and Maintenance, a leader in the field, is well-positioned to deepen its collaboration with Saudia to unlock additional opportunities in Saudi Arabia and across the region.
This agreement is also part of Saudia’s broader effort to increase local content and develop local talent and capabilities in aviation, aligning with Saudi Vision 2030’s objectives to build a strong national economy.
The deal supports Saudi Arabia’s National Aviation Strategy, which aims to position the Kingdom as a global leader in tourism, business travel, and logistics. Key goals include enhancing interconnectivity, expanding the market share of national carriers, and improving airport infrastructure.
The agreement was signed by Fahd Cynndy, managing director of Saudia Technic, and Anne Brachet, executive vice president of engineering and maintenance at Air France-KLM.
The partnership marks a significant milestone in Saudia’s efforts to enhance its technical operations within the Kingdom and solidify both parties’ commitment to mutual growth in the aviation sector.
Under the terms of the agreement, Saudia will take on the assembly and disassembly of GE90 engines, which are used in Boeing 777 aircraft. Saudia will also allocate at least 50 percent of GE90 work orders to Air France-KLM in exchange for the localization of these processes.
Additionally, the partnership explores the creation of a joint venture to support GEnx engines, which power Boeing 787 aircraft. This will further bolster Saudia’s growing MRO capabilities, which already include servicing CFM LEAP-1A engines used on the Airbus A320neo family of aircraft.
On the commercial front, the agreement also focuses on strengthening the codeshare relationship between Saudia and Air France-KLM, both members of the SkyTeam alliance. This will allow for expanded reciprocal codesharing across a broader range of domestic and international routes, improving connectivity and increasing flight frequency.
Coinciding with this announcement, Air France-KLM revealed plans to expand its presence in Saudi Arabia. The group will launch a new route between Paris-Charles de Gaulle and Riyadh in the summer of 2025, operated by Air France. This follows a recent agreement between Air France-KLM and Saudi Arabia’s Air Connectivity Program, signed in the presence of Deputy Minister of Tourism for International Affairs Sultan Al-Musallam.
In addition to the new Paris-Riyadh route, Transavia, the low-cost carrier of Air France-KLM, will begin flights to Jeddah from Paris-Orly and Lyon. With these new services, all three airlines in the Air France-KLM Group — Air France, KLM, and Transavia — will operate in Saudi Arabia. KLM currently serves Riyadh and Dammam from its hub at Amsterdam Schiphol.
Benjamin Smith expressed his excitement about the expansion, saying, “Saudi Arabia is rapidly becoming a world-class destination and a key gateway. We are thrilled to support the Kingdom’s growth by expanding our network and strengthening our existing routes.”
Majid Khan, CEO of the Saudi Air Connectivity Program, welcomed the addition of Air France services to the Kingdom, emphasizing that this move is part of broader efforts to enhance air connectivity to vital international destinations and streamline travel to Saudi Arabia.
“Air connectivity plays a critical role in driving tourism development. The new direct flights between Riyadh and Paris, set to launch in summer 2025, will facilitate a stronger flow of tourism between our two nations,” Khan said.
Saudi Arabia positioned to lead global hydrogen production, say experts
- SABIC, in collaboration with its parent company Aramco, plans to produce low-carbon ammonia
- COP16 panelists cautioned hydrogen alone will not solve global decarbonization challenges
RIYADH: Saudi Arabia is poised to become one of the world’s leading producers of hydrogen, capitalizing on its abundant renewable energy resources and robust infrastructure, experts say.
At the Saudi Green Initiative Forum in Riyadh, Abdulrahman Al-Fageeh, CEO and executive board member of SABIC, outlined the Kingdom’s unique advantages in the hydrogen sector.
“Saudi Arabia, by the way, as a country, is going to be the best competitive in terms of the economics of producing hydrogen from any source by having the solar, by having the wind and also by having the gray hydrogen that we have in our systems,” he said.
Al-Fageeh underscored that the Kingdom’s hydrogen ambitions would depend on close collaboration across the entire value chain, as well as strong regulatory support.
“Collaboration across the value chain is key, and regulators will play a crucial role,” he emphasized, highlighting the importance of coordinated efforts to scale production and integrate hydrogen into fuel systems and broader decarbonization strategies.
As part of its hydrogen strategy, SABIC, in collaboration with its parent company Aramco, plans to produce low-carbon ammonia.
“We have committed to advancing our decarbonization efforts using hydrogen and will collaborate with Aramco to produce low-carbon ammonia, which will play an important role in the fuel systems of the future,” Al-Fageeh added.
Sanjiv Lamba, CEO of Linde, also spoke positively about Saudi Arabia’s potential, describing hydrogen as a vital link in the global energy transition.
“Low-carbon hydrogen offers a cost-effective, scalable solution with mature technologies today, ensuring safe and reliable hydrogen production,” he said, adding that Saudi Arabia is particularly well-positioned to produce green hydrogen at globally competitive prices.
Kholoud Al-Otaibi, a clean hydrogen analyst at the Saudi Ministry of Energy, highlighted the Kingdom’s ongoing progress in building the necessary infrastructure for hydrogen production and export.
“The Kingdom is already taking deliberate steps to develop the protection and capacity, as well as the export infrastructure needed for hydrogen,” she said, underscoring the potential of hydrogen to support a sustainable energy future.
Despite the optimism, panelists cautioned that hydrogen alone will not solve global decarbonization challenges.
“It is one of many solutions. To address this pragmatically, we need to answer three key questions: where, what, and how,” said Al-Fageeh.
Francois Jackow, CEO of Air Liquide, noted that the energy transition is at a critical “scale-up phase,” requiring substantial investment and industrial innovation to unlock its full potential.
The forum also tackled broader challenges in climate finance, with experts stressing the urgent need to bridge the funding gap for climate adaptation, particularly in low- and middle-income countries.
Mohammed Ayoub, lead climate finance negotiator at the Saudi Ministry of Energy, warned that macroeconomic factors, such as unsustainable debt levels and foreign exchange risks, are restricting access to capital for developing nations.
“This is driving up the cost of capital due to lower sovereign ratings,” Ayoub said, explaining that it limits critical investments in climate adaptation measures that save lives and improve quality of life in vulnerable regions.
Florent Baarsch, founder and CEO of finres, highlighted the scale of the shortfall, pointing out that current overseas development assistance stands at $220 billion annually, far below the $300 billion to $500 billion needed each year for climate adaptation.
“Even if we allocated the entire ODA to adaptation, it would still fall short,” Baarsch said.
Rachel Kyte, the UK special representative on climate, said that adaptation finance must prioritize the most vulnerable populations and combine public and private funding to meet the scale of the challenge.
