Boeing Co. won an order for 100 jets from VietJet Aviation Joint Stock Co. valued at $11.3 billion in list prices as Vietnam’s only private airline expands fleet amid a surge in travel.
VietJet signed the agreement today in Hanoi during President Barack Obama’s visit to Vietnam. Delivery of the Boeing 737 Max 200 planes will run for four years beginning in 2019 and will help the carrier expand its fleet to 200 by the end of 2023, the company said in a statement.
The low-cost carrier, which started operations in December of 2011, is seeking to expand in a market that’s grown 20 percent annually in the last three years, according to the airline. At present, VietJet operates more than 250 flights a day with 50 routes in Vietnam and across the region to countries such as Thailand, Singapore, South Korea, Taiwan, China, Myanmar and Malaysia.
“They seem to be extremely ambitious,” said Brendan Sobie, Singapore-based chief analyst at CAPA Centre for Aviation. “They have established themselves domestically with a strong brand and high share of the market in a very quick time.”
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VietJet will probably surpass national carrier Vietnam Airlines as the nation’s biggest domestic carrier this year, according to CAPA Centre for Aviation. Vietnam is expected to rank among the world’s 10 fastest-growing aviation markets in the next two decades, according to the International Air Transport Association.
The Boeing aircraft “will accommodate our strategy of growing VietJet’s coming international route network, including long-haul flights,” Chief Executive Officer Nguyen Thi Phuong Thao in a statement.
The airline, known for its bikini-clad flight attendants, expects revenue to double this year from last year’s 10.9 trillion dong ($488 million) and to increase passenger capacity to 15 million after carrying 9.3 million in 2015.
The carrier may come out with an initial public offering as early as the second quarter as it plans to build global routes and become a top budget airline in Asia, Thao said in an interview earlier this year.
“Vietnam doesn’t have as many low-cost carriers as other markets — it was underserved while other markets were overserved,” CAPA Centre’s Sobie said. “They had the timing. They entered into the market as Vietnam’s economy was growing.”
Bloomberg
VietJet Aviation Joint Stock Company and Boeing [NYSE: BA] have finalized an order for 100 737 MAX 200 airplanes, the largest ever single commercial airplane purchase in Vietnam aviation. His Excellency Mr. Trần Đại Quang, President of the Socialist Republic of Vietnam, and U.S. President Barack Obama, witnessed the historic agreement, valued at approximately $11.3 billion at current list prices.
The signing ceremony, conducted by Vietjet President and CEO Nguyễn Thị Phương Thảo and Boeing Commercial Airplanes President and CEO Ray Conner, took place at the Presidential Palace in Hanoi, at approximately 11:40 a.m. local time.
“Vietjet is efficiently operating a fleet of narrow body airplanes. Our investment in a fleet of B737 Max 200 will accommodate our strategy of growing Vietjet’s coming international route network including long haul flights,” said Madam Nguyễn Thị Phương Thảo during the signing. “Through this Agreement, Vietjet will contribute increasing bilateral trade turnover between Vietnam and the United States, as well as contributing to the integration and development of the aviation industry in Vietnam.”
The airplanes will be delivered from 2019 through 2023, supporting Vietjet’s continuous growth of its domestic as well as international network in the region. This agreement also helps Vietjet to increase its fleet to more than 200 airplanes by the end 2023, with the most modern and advanced technology in the world.
“Boeing is proud to again play an integral role in advancing Vietnam’s aviation industry. We’re honored to be joined by President Quang and President Obama for this historic milestone and order of 100 737 MAX 200 airplanes,” said Conner. “Incorporating the latest design and technology features, the highly efficient 737 MAX 200 will provide Vietjet’s growing network with market-leading economics, a superior passenger experience and contribute significantly to their future success.”
The 737 MAX incorporates the latest technology CFM International LEAP-1B engines, Advanced Technology winglets and other improvements to deliver the highest efficiency, reliability and passenger comfort in the single-aisle market. The new single-aisle airplane will deliver 20 percent lower fuel use than the first Next-Generation 737s and the lowest operating costs in its class – 8 percent per seat less than its nearest competitor. To date, the 737 MAX has accumulated 3,098 orders from 65 customers around the world.
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