In a strategic move that could potentially reshape its fleet, Vietnam Airlines JSC is nearing a monumental deal with Boeing Co. BA.
What Happened: The agreement, which is still in its initial stages, involves the acquisition of about 50 Boeing 737 Max jets, a transaction that is estimated to be valued at a staggering $10 billion, according to individuals with knowledge of the matter, Bloomberg reported.
The national carrier, which has been navigating through financial turbulence, is planning to formalize the agreement through a memorandum during a visit by President Joe Biden to Vietnam. The prospective deal not only signifies a massive win for Boeing but also marks a departure for Vietnam Airlines from its existing all-Airbus single-aisle jet fleet.
The airline is reportedly looking to replace over 40 older-generation Airbus SE A321 planes with this new acquisition.
Earlier in the year, speculations were rife about Vietnam Airlines contemplating a substantial order of Airbus A321neo jets, according to Bloomberg.
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The impending agreement bears resemblance to a 2016 pact forged during the tenure of former President Barack Obama, where Vietjet Aviation JSC entered into an $11.3 billion contract for 100 737 Maxes.
Like its counterparts in Asia, Vietnam Airlines endured a rough patch throughout the COVID-19 pandemic, with a slow-paced recovery owing to extended border closures in the region. The airline has been registering losses each quarter since the beginning of 2020, Bloomberg reported.
However, a slight uptick in domestic travel has facilitated a reduction in the after-tax loss to $54 million in the second quarter of this year, down from approximately $108 million in the corresponding period last year.
Despite the optimistic trajectory, the airline’s financial health remains fragile, posing a challenge in securing funds for this hefty purchase, according to the outlet.
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