Vietnam’s VietJet to buy Boeing planes for $11.3bn

Vietnam’s VietJet yesterday agreed a firm order of 100 Boeing 737 MAX 200 jets worth $11.3bn at list prices, making it one of Southeast Asia’s fastest-growing low-cost carriers. The deal, signed during US President Barack Obama’s visit to Vietnam, represents a coup for Boeing, as VietJet has only operated its European rival Airbus’ A320 airplanes since it began operations in December 2011. The airline also signed a $3.04bn deal for engines made by Pratt & Whitney, a unit of United Technologies, for the 63 Airbus planes of the 99 it ordered and 7 hired since 2013. VietJet says it now has 36 Airbus planes in service, and the delivery of the Boeing planes, expected during 2019 to 2023, will bring the fleet to more than 200 aircraft by the end of 2023, potentially surpassing flag carrier Vietnam Airlines, which now has 89 operating aircraft. Vietnam Airlines ordered 19 Boeing 787 and 14 Airbus A350 planes and 11 of those have been delivered.  “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,” president and chief executive officer Nguyen Thi Phuong Thao said in a statement. VietJet has been rapidly expanding in Southeast Asia while taking on Vietnam Airines in the domestic market, and the Boeing deal is the biggest aircraft order in the country’s history. The budget carrier has a 40% share of Vietnam’s domestic market and will probably surpass Vietnam Airlines this year as the largest domestic carrier, according to a January report of the CAPA Centre for Aviation. VietJet has ambitions to become a pan-regional low-cost airline, following in the path of AirAsia of Malaysia and Lion Air of Indonesia, which also ordered hundreds of single-aisled planes, such as the A320 and Boeing 737. Southeast Asia’s airline market has grown rapidly over the last decade, fuelled by the emergence of budget airlines that offer greater travel options for the middle class. VietJet will also be unique in being one of the few low-cost carriers to order both Airbus A320s and Boeing 737s, as operating two types of planes is costly. Lion Air is the only other one, starting services with 737s before also ordering A320s and operating both aircraft types concurrently. The 737 Max and A320neo are the upgraded versions of both planes that promise better fuel economics and lower running costs. Airlines generally get discounts at list prices.