Hanoi: Vietnam Airlines JSC will sign an initial agreement to buy 50 Boeing Co 737 Max jets in a deal valued at about US$10bil at list prices, according to people with knowledge of the matter.
The financially challenged airline plans to sign a memorandum of understanding during President Joe Biden’s visit to Vietnam, the people said, asking not to be identified because the information is private.
A tentative order, worth billions to Boeing, would allow the national carrier to replace more than 40 older-generation Airbus SE A321 planes. Any order would be seen as a breakthrough for Boeing as Vietnam Airlines is an all-Airbus single-aisle jet operator.
The airline was weighing an order for as many as 50 Airbus A321neo jets, Bloomberg News reported in June. Vietnam Airlines also operates 20 newer A321neos.
The Hanoi-based carrier and Boeing representatives didn’t immediately respond to requests for comments outside of regular business hours.
During Biden’s official visit, Vietnam’s budget carrier VietJet Aviation JSC plans to reaffirm a deal for 200 737 Max jets it ordered over the last several years and take delivery of the first of 12 of the US-made single-aisle jets, people with knowledge of the matter said. It will also ink a financing package worth about US$500mil for Boeing’s aircraft, they said.
Airlines typically negotiate steep discounts compared with industry list prices for aircraft.
Like many airlines in Asia, 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, narrowing from 2.6 trillion dong in the same period last year as domestic travel picked up.
Losses in 2022 were 10.1 trillion dong due to rising fuel costs and exchange-rate volatility. That was on revenue of around 71 trillion dong, at about 70% of 2019 levels. — Bloomberg
