Vietnam Airlines JSC signed an preliminary deal for 50 Boeing Co. 737 Max aircraft during a visit by US President Joe Biden to the Southeast Asian nation.
(Bloomberg) — Vietnam Airlines JSC signed an preliminary deal for 50 Boeing Co. 737 Max aircraft during a visit by US President Joe Biden to the Southeast Asian nation.
The memorandum of understanding is valued at $10 billion, Vietnam Airlines said in a statement Monday. The White House hailed the “landmark deal,” saying it was worth $7.8 billion and will support more than 30,000 American jobs.
The accord, confirming a Bloomberg News report, comes at a pivotal moment for US ties with Vietnam. Hanoi on Sunday upgraded its relationship with Washington to a “comprehensive strategic partnership” — putting the US on the highest level alongside China and India.
The deal also marks a breakthrough for Boeing as Vietnam Airlines currently operates an all-Airbus SE single-aisle fleet. The carrier had been weighing an order for as many as 50 Airbus A321neo jets, Bloomberg News reported in June.
Also during Biden’s visit, VietJet Aviation JSC reaffirmed a US$25 billion deal for 200 737 Max jets it ordered to take delivery of over the next five years. The budget carrier inked a financing package worth about $550 million for the first batch of aircraft with the Carlyle Group Inc.
Vietnam Airlines said the Max jet will help its longer-term plans to renew its aircraft fleet. The airline said it needs to add about 60 new aircraft by 2030 and 100 by 2035. Airlines typically negotiate discounts from industry list prices for aircraft.
Like many others, Vietnamese carriers struggled throughout the Covid-19 pandemic and have been slow to recover as international borders in the region took longer to reopen than in other parts of the world.
Vietnam Airlines has lost money every quarter since the start of 2020. It reported an after-tax loss for the second quarter of 1.3 trillion dong ($54 million), narrowing from 2.6 trillion dong in the same period last year.
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There will be challenges for the financially-strapped carrier in getting aircraft delivered in the near term, given that Airbus and Boeing have sold out most of their production slots through the end of the decade.
Vietnam Airlines operates a fleet of 100 Airbus and Boeing aircraft, FlightRadar24 data show. VietJet Air has 100 Airbus planes in operation and more than 300 aircraft pending delivery.
(Updates with confirmation of VietJet and Vietnam Air agreements.)
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