VietJet and Boeing sign $11.3 billion airplane sales deal

By    May 22, 2016 | 08:14 pm PT
VietJet and Boeing sign $11.3 billion airplane sales deal
Ground staff check a VietJet A320 airplane before departure for Bangkok, at Noi Bai international airport in Hanoi September 25, 2013. Photo by REUTERS/KHAM
VietJet Aviation Joint Stock Co. and Boeing on Monday agreed on a deal for 100 aircraft worth $11.3 billion, the largest ever single commercial airplane purchase in Vietnam's aviation history.

The event was attended by U.S. President Barack Obama who is paying a three-day landmark visit to Vietnam.

The deal was hailed by Obama and Vietnamese State President Tran Dai Quang as a sign of deepening trade ties between the two former enemies.

“Boeing is proud to play an integral role in advancing Vietnam’s aviation industry. We’re honored to be joined by President Tran Dai Quang and President Obama for this historic milestone and order of 100 737 MAX airplanes,” said Raymond L. Conner, president and chief executive officer of Boeing Commercial Airplanes. “The highly efficient 737 MAX, built with the latest design and technology features, will provide VietJet’s growing network with market-leading economics, a superior passenger experience and contribute significantly to their future success,” Conner added.

"VietJet operates a fleet of narrow-bodied airplanes. Our investment in a fleet of B737 Max 200 will accommodate our growth strategy to expand VietJet's international network including long haul flights,” said Nguyen Thi Phuong Thao, VietJet Aviation CEO.

“With this deal, VietJet will contribute to the increasing bilateral trade turnover between Vietnam and the United States, as well as contribute to the integration and development of the aviation industry in Vietnam,‎” Thao, who founded the airline, added.

The planes are expected to be delivered to VietJet between 2019 and 2023.

This purchase will increase the low-cost carrier's fleet to more than 200 aircraft by the end of 2023.

VietJet has managed to expand rapidly in a market that’s grown 20 percent annually in the last three years, according to the airline.

Earlier this year, VietJet signed a $3.04 billion deal to buy Pratt & Whitney engines to outfit 63 Airbus A320neo and A321neo airplanes it contracted last year. The company plans to add a dozen planes annually to its fleet of 42 planes, Thao said.

VietJet carried 9.3 million passengers in 2015, an increase of 66 percent from 2014.

Revenue soared 205 percent last year to 10.9 trillion dong ($488 million), while net income rose to almost VND1 trillion, according to the company.

The airline expects revenue to double this year and passenger numbers to reach 15 million.

The airline is aiming to seek a valuation of at least $1 billion for its IPO. That would make VietJet a more valuable company than Malaysia’s AirAsia Bhd., PT Garuda Indonesia and Thai Airways International.

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