Lift off: State agrees to bankroll carrier’s aircraft deal

The prime minister’s decision to allow the national flag carrier to spend up to $626.2 million on the Airbus 321 deal, which is yet to be signed, was announced by the government last week. The government will finance up to 15 per cent of the deal, while the remaining funds will be sourced from export credit and commercial loans.
Interest on loans provided to the airline will not be taxed and the government will also provide credit guarantees. The actual cost of the deal will depend on final negotiations between the carrier and aircraft maker. A memorandum of understanding on the deal was inked between Vietnam Airlines and Airbus during the recent ASEM 5 summit.
The first two Airbus 321 planes in the 10-jet deal are expected to be delivered in 2006. Four should follow in 2007 and the rest are scheduled to be handed over by 2010.
The government also approved in principle Vietnam Airlines’ plans to buy four Boeing 7E7 aircraft.
However, it asked the carrier to hold discussions with the Ministry of Finance to source capital to replace the 15 per cent of the possible deal that the airline proposed should come from the state budget.
The first Boeing 7E7 aircraft, which the American aircraft maker claims is more efficient than current aircraft, will be launched in 2008. In addition to Boeing and Airbus planes, the government proposed purchasing planes from Russia or other countries, as long as they met efficiency and safety standards.
Vietnam Airlines has expressed interest in doubling its fleet to 73 aircraft by 2010, aiming for an annual growth of about 20 per cent until then.
Since 2001, the national carrier has spent almost $700 million to buy four Boeing 777-200ER, five Airbus 321-200 and three ATR 72-500.
These purchases have made the Vietnam Airlines fleet stronger than ever, the government said.
The deals were mainly financed by loans from Citibank, ABN-AMRO, Natexis Banque Populaire and four local state-owned commercial banks.