Vietnam Airlines has agreed to a $7.8 billion deal with U.S. aircraft manufacturer Boeing (NYSE:BA), the White House announced on Monday. The agreement was reached during a meeting in Hanoi between U.S. President Joe Biden and Vietnamese Prime Minister Pham Minh Chinh.
As part of the deal, Vietnam Airlines will acquire 50 Boeing 737 aircraft, which is expected to support more than 30,000 jobs in the United States. This move comes as part of an effort by the airline to replace its fleet of aircraft that are over a decade old.
The deal is yet to be finalized as the financing details have yet to be settled. Tran Thanh Hien, finance director of Vietnam Airlines, stated that the B737 MAX aircraft would be due from 2027 to 2030, giving the airline four years to prepare the necessary conditions for the receipt of the aircraft, including capital mobilization.
Hien also expressed confidence in Vietnam Airlines' ability to balance part of the capital for this project through restructuring and recovery of the aviation market. He further mentioned that they hope to receive financial support from Boeing, the U.S. Government, likely EXIM Bank (United States of America), and other financial institutions for the project.
Currently, Vietnam Airlines operates a fleet of 100 aircraft, including 15 Boeing 787 Dreamliners. This marks a significant shift for the majority state-owned carrier as it has never operated narrowbody Boeing aircraft before. Its single-aisle fleet comprises forty-eight A321-200s and twenty A321-200Ns.
The deal signifies a major boost for Vietnam's aviation sector which has seen substantial growth in recent years due to an expanding middle class with increasing appetites and budgets for air travel. The agreement also highlights Vietnam Airlines' commitment to modernizing its fleet and improving its services in the face of growing competition, particularly from rival low-cost carrier VietJetAir, which has a firm order for 200 B737 MAX aircraft, none of which have been delivered yet.
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