VietJet Agrees 92-Plane Airbus A320 Order

September 25, 2013

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Vietnamese low-cost airline VietJet has agreed to buy up to 92 Airbus A320-family planes worth about USD$8.6 billion at list prices in a move to beef up its presence in a fast-growing regional market.

VietJet would buy mostly A320 planes using loans from foreign banks, managing director Luu Duc Khanh told Reuters news agency.

The deal is the latest major order from Asia's budget carriers, highlighting a rapid shift towards air travel that prompted Airbus to raise its long-term industry forecasts on Tuesday.

Of the 92 jets, 62 were firm orders, with a further 30 options to buy. The airline also planned to lease eight more planes.

"This deal is a milestone in our company, it means we are aiming to be a multinational budget airlines," Khanh said.

"Vietjet Air's purpose is expanding to the regional market, not only in the domestic market, so we need to be in the overseas market in order to call in more capital."

Vietjet, which has been flying since December 2011, has a fleet of nine jets. It is the only private airline in Vietnam that offers domestic and international flights. At present, its only overseas destination is Bangkok.

BIG AMBITIONS

The first two aircraft would be delivered in the fourth quarter of 2014 followed by between five and 10 jets each year until 2022, Khanh said.

The agreement, part of a package of industrial contracts signed in front of the French and Vietnamese prime ministers in France on Wednesday, was agreed after last-minute negotiations as the airline said it needed more time.

Airline industry experts say VietJet has big ambitions and wants to follow the path of low-cost giants AirAsia of Malaysia and Lion Air of Indonesia.

VietJet was also talking to an airline in Myanmar about a possible joint venture similar to its agreement in June with Thailand's KanAir to form Thai VietJet Air early next year, Khanh added. He would not say which of Myanmar's seven airlines the firm was looking to partner with.

Air Bagan was in discussion with VietJet about an "interline agreement" that would allow the carriers to sell each others' tickets, deputy managing director, Sao Thanda Noi told Reuters on Wednesday, but he said there was no plan for a joint venture.

Airbus and Vietjet said the deal included firm orders for 42 A320neos, 14 current-generation A320s and six A321s.

(Reuters)