Vietnam Airlines JSC will sign an initial agreement to buy about 50 Boeing Co. 737 Max jets in a deal valued at $10 billion, according to people familiar with the matter.
The financially challenged airline plans to sign a memorandum of understanding during President Joe Biden’s visit to Vietnam, the people said, asking not to be identified because the information is private.
A tentative order, worth billions to Boeing, would allow the national carrier to replace more than 40 older-generation Airbus SE A321 planes. Any order would be seen as a breakthrough for Boeing as Vietnam Airlines is an all-Airbus single-aisle jet operator.
ALSO READ
- Boeing warns 737 deliveries will be at low end of 2023 target
- New Boeing 737 MAX supplier defect to delay aircraft deliveries
- Gulf's newest airline Riyadh Air launches ambitious recruitment drive - targets 700 pilots in 3 years
- Boeing shares fall as 737 goal at risk from supplier defect involving Spirit
The airline was weighing an order for as many as 50 Airbus A321neo jets, Bloomberg News reported in June. Vietnam Airlines also operates 20 newer A321neos.
The Hanoi-based carrier and Boeing representatives didn’t immediately respond to requests for comments outside of regular business hours.
Vietnam Air’s deal would echo an agreement made during then-President Barack Obama’s visit in 2016 to the Southeast Asian nation, when budget carrier Vietjet Aviation JSC signed a $11.3 billion pact for 100 737 Maxes. Two years later, it doubled its order.
Like many carriers in Asia, Vietnam Airlines struggled throughout the Covid-19 pandemic and has been slow to recover as borders in the region took longer to reopen than other parts of the world. The carrier has lost money every quarter since the start of 2020.
Vietnam Airlines reported an after-tax loss for the second quarter of 1.3 trillion dong ($54 million), narrowing from 2.6 trillion dong in the same period last year as domestic travel picked up.
Losses in 2022 were 10.1 trillion dong due to rising fuel costs and exchange-rate volatility. That was on revenue of around 71 trillion dong, at about 70% of 2019 levels.
Vietnam Air’s former Chief Executive Officer Duong Tri Thanh said in an interview in early 2019, prior to the pandemic, that the carrier was considering an order of 50-100 Boeing 737 Max planes to replace its fleet of Airbus single-aisle jets.
The airline’s financial situation may make it more difficult to fund a large order, and it will also likely face challenges getting near-term delivery of new aircraft. Both Airbus and Boeing have sold out most of their production slots through the end of the decade.
