Date
17 October 2017
VietJet Aviaiton, a five-year-old airline, is adding diversity to its fleet which has consisted entirely of Airbus aircraft. Photo: Internet
VietJet Aviaiton, a five-year-old airline, is adding diversity to its fleet which has consisted entirely of Airbus aircraft. Photo: Internet

Boeing bags US$11.3 bln order from Vietnam airline

Boeing Co. has won a US$11.3 billion order from Vietnam’s only private airline, trumping rival Airbus Group SE in a battle over Asia’s surging market for low-cost carriers.

Bloomberg is reporting that VietJet Aviation Joint Stock Co. will buy 100 737 Max jetliners on the sidelines of a historic visit to Hanoi by US President Barack Obama.

The deal will add diversity to a fleet that has consisted entirely of Airbus planes.

“That’s a decent surprise,” said George Ferguson, an analyst with Bloomberg Intelligence.

“You never want to lose a customer but that region is full of low-cost airlines. To me, this is just another airline with very big expectations in the region. So there’s going to be a battle for who takes this market, and Airbus is not out of it.”

The order adds to Boeing’s 2016 lead in the single-aisle aircraft market as the Chicago-based company looks to make up ground after Airbus built a commanding lead in recent years.

The jetmakers are rolling out competing narrow-body models — Boeing’s 737 Max and Airbus’s A320neo — to capitalize on growing demand for global air travel.

Boeing’s win with VietJet marks a shift for discount carriers that typically stick with a single aircraft type to reduce costs for spare parts and pilot training.

The airline, which is less than five years old, agreed as recently as November to buy 30 A320neos valued at US$3.6 billion at list price, topping up an order for 100 placed at the 2014 Singapore Airshow.

The value of the Boeing deal is also based on list prices. Carriers typically negotiate discounts on plane deals.

Airbus, based in Toulouse, France, said it counts VietJet “as an existing customer for our A320 family” while noting it typically doesn’t comment on airlines’ purchases.

The new 737 Max 200s will be delivered starting in 2019, VietJet and Boeing said in a joint statement.

Talks with Boeing began when a Vietnamese delegation visited the US in July, according to Dinesh Keskar, the US company’s senior vice president of sales for the region.

“Certainly a 100-plane order will move the needle in our direction,” Keskar said. “The Vietnam low-cost-carrier market is a growing market and is going to be an important one in the future.”

VietJet offers more than 250 flights a day on about 50 routes to countries such as Thailand, South Korea and China.

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