HANOI: Vietnam Airlines has signed a preliminary deal for 50 Boeing 737 Max aircraft during a visit by US President Joe Biden to the country.
The memorandum of understanding is valued at $10 billion, Vietnam Airlines said in a statement. The White House hailed the “landmark deal”, saying it was worth $7.8 billion and would support more than 30,000 American jobs.
The accord comes at a pivotal moment for US ties with Vietnam. Hanoi on Sunday upgraded its relationship with Washington to a “comprehensive strategic partnership” — putting the US on the highest level alongside China and India.
The deal also marks a breakthrough for Boeing as Vietnam Airlines currently operates an all-Airbus single-aisle fleet. The carrier had been weighing an order for as many as 50 Airbus A321neo jets, Bloomberg News reported in June.
Also during Biden’s visit, VietJet Aviation reaffirmed a $25-billion deal for 200 737 Max jets it has ordered for delivery over the next five years. The budget carrier signed a financing package worth about $550 million for the first batch of aircraft with the Carlyle Group.
The first batch of 12 jets would be delivered to its Thailand subsidiary, Thai VietJet, the company said, following a meeting between VietJet chairwoman Nguyen Thi Phuong Thao and Boeing global president Brendan Nelson in Hanoi.
Vietnam Airlines said the Max jets were a key to its longer-term plans to renew its aircraft fleet. The airline said it needs to add about 60 new aircraft by 2030 and 100 by 2035. Airlines typically negotiate discounts from industry list prices for aircraft.
Like many others, Vietnamese carriers struggled throughout the Covid-19 pandemic and have been slow to recover as international borders in the region took longer to reopen than in other parts of the world.
Vietnam Airlines has lost money in every quarter since the start of 2020. It 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.
There will be challenges for the financially strapped carrier in getting aircraft delivered in the near term, given that Airbus and Boeing have sold out most of their production slots through the end of the decade.
Vietnam Airlines operates a fleet of 100 Airbus and Boeing aircraft, according to FlightRadar24. VietJet Air has 100 Airbus planes in operation and more than 300 aircraft pending delivery.