VietJet Orders 100 New Boeing Planes for over $11.2 Billion
VietJet, based in Vietnam, announced on Monday it had agreed to order 100 737 MAX 200 Boeing jets that were worth $11.2 billion at Boeing’s list prices. That makes it one of the fastest growing, Southeast Asia low cost carriers.
The agreed upon deal was signed during the visit to Vietnam by United States President Barack Obama and represents a big coup for the airline maker as VietJet has operated only its rival Airbus A 320 planes since it started its operations in last 2011.
The airline signed a deal worth $3.04 billion for Pratt & Whitney engines for 63 Airbus aircraft out of the 99 ordered and 7 hired the past three years.
VietJet said it now has at this time 36 Airbus aircraft in service and that the delivery of the planes from Boeing, expected between 2019 and 2023, will bring its fleet to more than 200 by the start of 2024 and potentially pass Vietnam Airlines the current flag carrier, which has 89 aircraft operating currently.
Vietnam Airlines has ordered 19 787 Boeing aircraft and 14 A350 Airbus planes.
CEO and President Nguyen Thi Phuong Thai announced that VietJet has rapidly expanded in the area of Southeast Asia while battling with Vietnam Airlines in its backyard. The deal with Boeing is the largest aircraft deal in the history of the country.
The budget carrier holds a share of 40% of the domestic market of Vietnam and will likely surpass its rival this year, as the largest domestic airline, according to a report in January of the Centre for Aviation CAPA.
VietJet wants to become a low-cost, pan-regional airline, following the path of Lion Air from Indonesia and AirAsia from Malaysia.
Southeast Asia’s airline market has seen a massive growth spurt the past 10 years, fueled in part due to the emergence of the budget airlines that are offering exceptional travel options for those in the middle class.
VietJet is unique in that it will be one of the few carriers that are low cost to order both Boeing 737s and Airbus A320s, as the operation of two types of plans can become quite costly.
At this time, Lion Air is the only other airline to do that, starting service with the Boeing 737 and then ordering the A320s and operating both types concurrently.
The A320neo and 737 Max are upgraded versions of each plane that promise better fuel economy and lower costs of operation.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.