Vietnam Airlines has officially confirmed its order for 50 aircraft from Boeing. This order exclusively covers the 737 MAX 8 model and was publicly announced during a signing ceremony attended by President Joe Biden, Secretary of State Antony Blinken, White House officials, and Vietnamese government leaders on September 11th.
Dang Ngoc Hoa, Chairman of the Board of Directors of Vietnam Airlines, expressed the importance of this deal, emphasizing its alignment with the airline's strategic fleet plan for 2025-2030 and its long-term vision through 2035. He highlighted that investing in these new narrowbody aircraft is a pivotal initiative to support the airline's recovery and growth, enabling enhanced service on domestic and Asian routes and the modernization of its fuel-efficient fleet.
This agreement also signifies a significant milestone for Boeing in the Vietnamese aviation market, as Vietnam Airlines joins the list of prominent customers opting for Boeing's flagship 737 MAX narrowbody aircraft. In 2022, VietJet, a low-cost startup, placed an order for 200 units of the 737 MAX, with deliveries scheduled to commence in 2024. This order was particularly noteworthy for Boeing, given VietJet's predominantly Airbus-oriented existing fleet.
As of now, Vietnam Airlines does not operate any Boeing narrowbody aircraft, but it does operate the 787 Dreamliner. In the past, it has operated the 777 and 767 models but has largely relied on the A320 family for narrowbody operations. Brad McMullen, Boeing's Senior Vice President of Commercial 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 noted the long-standing partnership between Boeing and Vietnam Airlines, dating back to 1995 when the airline first leased 767 aircraft.
The decision to acquire 50 narrowbody 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 contemplating whether to choose the A320neo family or the 737 MAX 8 for this acquisition. The original plan was to complete the purchase between 2020 and 2022 to ensure delivery by 2025. However, the Transport Ministry expressed concerns about the airline's lack of detailed plans for future routes and workforce expansion. Additionally, there were uncertainties surrounding the grounding of the 737 MAX, and concerns were raised about technical issues related to the Pratt & Whitney engines used in the Airbus A320neo and A321neo aircraft. Before a decision could be reached, the COVID-19 pandemic further weakened the airline's financial situation.
Given the pre-pandemic plans and Vietnam's position as the world's fifth-fastest-growing aviation market, this move by Vietnam Airlines to renew and expand its fleet is crucial to remain competitive in the face of growing competition from local carriers like Bamboo Airways and Vietjet.
Vietnam Airlines strategically timed this Boeing deal to coincide with President Biden's visit to Hanoi, Vietnam, likely aiming to strengthen political ties. While the specific financial details of the agreement were not disclosed, its estimated value at list price is approximately $10 billion. However, it's important to note that the flag carrier would have secured a substantial discount for this bulk purchase.
