Vietnam Airlines has officially confirmed its order for 50 aircraft from Boeing. The order is exclusive to the 737 MAX 8 and was announced publicly on September 11 at a signing ceremony attended by President Joe Biden, Secretary of State Antony Blinken, White House officials and Vietnamese government leaders.
Dang Ngoc Hoa, Chairman of the Board of Directors of Vietnam Airlines, expressed the importance of this agreement, highlighting its alignment with the airline’s strategic fleet plan for 2025-2030 and its long-term vision to 2035. He emphasized that investing in these latest single-aisle aircraft is a key initiative to geared toward supporting the airline’s economic recovery and development, enabling improved services on domestic and Asian routes and modernizing its fuel-efficient fleet.
This agreement also marks a milestone for Boeing within the Vietnamese aviation market, as Vietnam Airlines joins the list of leading customers selecting Boeing’s flagship single-aisle aircraft, the 737 MAX. In 2022, low-cost startup VietJet placed an order for 200 737 MAXs, with deliveries expected to start in 2024. The order was particularly noteworthy for Boeing given VietJet’s existing primarily Airbus-oriented fleet.
Currently, Vietnam Airlines doesn’t operate any Boeing single-aisle aircraft, but does operate the Boeing 787 Dreamliner. It has operated 777 and 767 models prior to now, but has relied heavily on the A320 family for single-aisle operations. Brad McMullen, Boeing’s senior vp of business sales and marketing, expressed the suitability of the 737 MAX for Vietnam Airlines given the rapid growth of the Southeast Asian aviation market. He also highlighted the long-standing cooperation between Boeing and Vietnam Airlines, which dates back to 1995, when the airline first leased 767 aircraft.
The decision to buy 50 single-aisle aircraft by 2025 was initially discussed by the Vietnamese Ministry of Transport in 2019, at a time when Vietnam Airlines was facing financial challenges. The airline was considering whether to decide on the A320neo family or the 737 MAX 8 family for this acquisition. The original plan was to finalize the acquisition between 2020 and 2022 to make sure delivery by 2025. However, the Ministry of Transport raised concerns in regards to the airline’s lack of detailed plans for future routes and increase employments. In addition, there have been uncertainties in regards to the grounding of the 737 MAX and concerns were raised about technical problems with the Pratt & Whitney engines utilized in the Airbus A320neo and A321neo aircraft. Before a call might be made, the Covid-19 pandemic further weakened the airline’s financial position.
Given pre-pandemic plans and Vietnam’s position because the world’s fifth fastest-growing aviation market, Vietnam Airlines’ move to renew and expand its fleet is crucial to remaining competitive within the face of accelerating competition from local carriers reminiscent of Bamboo Airways and Vietjet .
Vietnam Airlines strategically timed its cope with Boeing to coincide with President Biden’s visit to Hanoi, Vietnam, likely geared toward strengthening political ties. While specific financial details of the deal weren’t disclosed, its estimated value at list price is roughly $10 billion. However, be mindful that with such a bulk purchase, the flag carrier would receive a major discount.
