VietJetAir finalizes aircraft purchase deal with Airbus in S’pore

Accordingly, the purchase agreement covers the orders for 63 aircraft valued at $6.4 billion, including forty-two A320neo, fourteen A320ceo and seven A321ceo, plus 30 purchase rights.

In addition, the airline will lease seven more A320 Family aircraft from third party provider in an effort to expand further into the regional market in 2014.

The order was finalized on Wednesday at the Singapore Airshow by Nguyen Thi Phuong Thao, Vice Chairwoman and CEO of VietJetAir and FabriceBrégier, President and CEO of Airbus. The signing was witnessed by Dinh La Thang, Minister of Transport of Vietnam, Le Luong Minh, Secretary General of ASEAN and Tran Hai Hau, Ambassador of Vietnam to Singapore.

The recently inked deal will enable the first batch of aircraft of this contract to be delivered within this year, said VJA.

The purchasing agreement of 100 aircrafts, which is valued at $9.1 billion, is funded by many international lenders including BNP Paribas and China Construction Bank (CCB) and CCB Financial Leasing Corp Ltd (CCBFL).

In late December 2013, VJA signed an agreement with BNP Paribas in which the international bank will be in charge of managing the financing for VJA’s three first aircraft that the company ordered from Airbus in the September deal.

Though the value of the deal has yet to be disclosed, a representative of VJA said that the price of the three aircraft which will be delivered in 2014 is $258 million.

VJA signed another agreement to buy GE (General Electric) & Snecma engines in a deal worth some US$800 million during the visit of US Secretary of State John Kerry to Vietnam in mid-December 2013. The engines were said to be used for 100 aircrafts that VJA ordered from Airbus in September 2013.

One month earlier, VJA, CCB and CCBFL reached the agreement so that the Chinese lenders will provide VJA with necessary financial aid to buy aircrafts, engines and other aviation supplies.

In October 2013, VJA managing director Luu Duc Khanh told Tuoi Trethat VJA will contribute capital to joint ventures with three Asian airlines in 2014 in an effort to become a multinational company and develop its joint ventures with international airlines.

The company will enter joint ventures with Thailand’s Kan Air, Myanmar Airlines and a Northeast Asian airline next year, Khanh said.

Khanh said the plan will be funded from VJA’s own capital, plus bank loans, bonds, and money it expects to earn from the IPO (initial public offering).

In September 29013, VJA announced it was considering an IPO in the next 18-42 months to find more funding for the regional expansion plan.

Though just started flying from December 2011, VJA has occupied 20 percent of total domestic flight seats, compared with 67 percent of VNA, according to a report from research firm Aviation CAPA Centre for Aviation.

“VJA will add planes as it focuses on the local market and plans more routes overseas, with passenger growth in the Asia-Pacific region to surpass that in Europe and North America through 2016,” Bloomberg quoted a forecast by the International Air Transport Association.

VietJetAir took to the skies in 2011 and is the first private airline in Vietnam to operate domestic and international flights.

The airline is operating a fleet of 11 A320s on a network covering 600 flights per week and 19 routes, including domestic destinations, Bangkok, Seoul and Kunming in China.