Boeing signs massive jet deal with VietJet

Posted on 25 May 2016 by Michael Cruickshank

Aerospace manufacturer Boeing announced yesterday that it had signed a massive new deal to sell aircraft to VietJet, Vietnam’s sole privately-owned airline.

Under the deal, the company will sell 100 Boeing 737 MAX 200 aircraft to VietJet Aviation.

In total the deal will reportedly be worth approximately $11.3bn, making it the largest aviation deal in Vietnamese history.

The signing of the landmark deal, conducted in Hanoi, was witnessed by both Trần Đại Quang, President of Vietnam, as well as US President Obama who was in the country on an official visit.

VietJet is a low cost carrier operating in the South East Asian region, and it plans to upgrade its fleet with new single-aisle Boeing aircraft.

The first deliveries of the 737s will reportedly occur in 2019, with the final ordered aircraft due to be delivered in 2023.

“VietJet is efficiently operating a fleet of narrow body airplanes. Our investment in a fleet of B737 Max 200 will accommodate our strategy of growing VietJet’s coming international route network including long haul flights,” said VietJet CEO Nguyễn Thị Phương Thảo during the signing.

The deal represents a major change for VietJet and a significant coup for Boeing, due to the fact that previously 100% of VietJet’s fleet consisted of aircraft manufactured by rival Airbus Group.

Boeing touted the technical prowess of the 737 MAX 200 aircraft as key to securing this deal.

“…the highly efficient 737 MAX 200 will provide VietJet’s growing network with market-leading economics, a superior passenger experience and contribute significantly to their future success,” said Boeing Commercial Airplanes CEO Ray Conner.

The signing of the deal comes at a time of rapidly thawing relations between Vietnam and the US. During his recent visit, US President Obama announced an end to the decades-long arms embargo imposed on the country.

While this Boeing-VietJet deal does not involve military systems, the company, which is also a huge defence manufacturer, could stand to make significant profits through arms sales to Vietnam.

Within this context the $11.3bn deal could be seen as a ‘foot in the door’ for Boeing, proving their worth in this new market.