Vietnam Airlines is on the brink of making a massive purchase from Boeing. The airline is in talks to buy around 50 Boeing 737 Max jets, with the deal’s value estimated at a whopping $7.5 billion. This comes at a time when U.S. President Joe Biden is in Hanoi, aiming to strengthen relations between the U.S. and Vietnam.
A Growing Aviation Market
Vietnam’s aviation scene is booming. In 2022, the country ranked as the fifth fastest-growing aviation market in the world, right after it eased COVID-19 travel restrictions. The International Air Transport Association (IATA) even forecasts that by 2035, Vietnam will cater to 150 million air transport passengers. This growth makes the timing of the Boeing deal even more significant.
It’s worth noting that Boeing already has a deal in place with VietJet, a rival of Vietnam Airlines, for 200 of its 737 MAX planes. On the flip side, Vietnam Airlines has been facing some financial turbulence. The airline reported a net loss of 1.3 trillion dong ($53.96 million) in the second quarter of this year, marking its 14th consecutive quarter in the red. The airline attributes these losses to factors like rising fuel prices.
Beyond Commercial Planes
Boeing isn’t just stopping at commercial airlines in Vietnam. The company is also in discussions with Vietnamese authorities for the potential sale of military equipment, including drones and helicopters. Boeing, based in Arlington, Virginia, already has six suppliers in Vietnam and is looking to expand their capabilities.
The deal between Vietnam Airlines and Boeing is still in the initial stages, and neither party has commented on it yet. However, the deal is expected to be worth up to $7 billion at list prices. Usually, companies that buy in bulk get discounts, but there’s no word on that for this deal yet. The Boeing 737 Max jets, which were grounded worldwide after two fatal crashes in 2018 and 2019, have been back in service since the end of 2020.
Source: Reuters
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