Vietnam Airlines gets go-ahead to buy 50 narrow-body aircraft
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Vietnam Airlines has been granted in-principle approval by the government to acquire 50 narrow-body aircraft without requiring a state guarantee.
The approval, outlined in an official dispatch from the Government Office reflecting the views of Deputy Prime Minister Ho Duc Phoc, is intended to address future travel demand and phase out aging aircraft.
Vietnam Airlines previously proposed buying 50 Airbus A320 NEO and Boeing 737 MAX jets, along with 10 spare engines, at a total estimated cost of around US$3.7 billion—equivalent to 1.6 times its current total asset value, based on 2024 financial data.
The new aircraft will gradually phase out older A321 CEO planes as part of the airline’s fleet modernization plan.
Earlier this month, during Phoc’s visit to the U.S., Vietnam Airlines signed a memorandum of understanding with Citibank for $560 million in funding for strategic projects, including the aircraft purchase. It also signed a separate MOU with Vietcombank to prepare additional capital for the acquisition.
In September 2023, Vietnam Airlines signed a deal to purchase 50 Boeing 737 MAX aircraft, with deliveries expected between 2027 and 2030.
Looking ahead, the airline projects it will need a fleet of 52 wide-body and 112 narrow-body aircraft by 2035. At present, Vietnam Airlines operates a fleet of about 100 planes, including more than 30 wide-body jets.
According to its 2024 financial report, the carrier earned over VND113.7 trillion (US$4.37 billion) in revenue, transporting 22.7 million passengers and 314,700 tons of cargo. Its aircraft utilization averaged 11 hours per day, a 25% increase from 2023.
Questions & Answers
Q.What is the primary reason the government approved the acquisition of these new aircraft?
What is the primary reason the government approved the acquisition of these new aircraft?
The approval is intended to address future travel demand and facilitate the phasing out of the airline's older aircraft. This aligns with Vietnam Airlines' broader fleet modernization plan.
Q.Which specific aircraft models did Vietnam Airlines initially propose to purchase?
Which specific aircraft models did Vietnam Airlines initially propose to purchase?
Vietnam Airlines previously proposed acquiring 50 Airbus A320 NEO and Boeing 737 MAX jets. They also included a proposal for 10 spare engines as part of the total package.
Q.What is the estimated total cost of this acquisition, and how does it compare to Vietnam Airlines' current assets?
What is the estimated total cost of this acquisition, and how does it compare to Vietnam Airlines' current assets?
The estimated total cost is around US$3.7 billion. This amount is equivalent to 1.6 times Vietnam Airlines' current total asset value, based on their 2024 financial data.
Q.When does Vietnam Airlines expect to take delivery of the new Boeing 737 MAX aircraft?
When does Vietnam Airlines expect to take delivery of the new Boeing 737 MAX aircraft?
Deliveries of the 50 Boeing 737 MAX aircraft, for which a deal was signed in September 2023, are expected to take place between 2027 and 2030.
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