Budget Line VietJet Buys 30 Airbus Planes for $3.6 Billion

  • Fast-growing airline will begin offering non-stops to Japan
  • Deal firms up options originally taken at 2014 Singapore show

Low-cost airline VietJet Aviation Joint Stock Co. agreed to buy 30 Airbus Group SE A321 planes at the Dubai Airshow, a deal worth $3.6 billion at list prices.

The purchase is for nine A321ceo and 21 A321neo aircraft, Hanoi-based VietJet said in a release Tuesday announcing the deal.

“VietJet has grown faster than expected in the last few years and our previous purchasing plans for new aircraft could not keep up with developing demand," VietJet President and CEO Nguyen Thi Phuong Thao was quoted as saying in the release.

Vietnam’s only privately owned carrier is seeking to expand in a market that grew 20 percent from a year earlier in the first half of 2015. VietJet initially took out options on the planes at the 2014 Singapore Airshow, part of a contract it signed for 100 aircraft.

Route Tree

Although the "focused and stressful" negotiations ran over the allotted time, VietJet is "very happy with the deal and contract we signed," Thao said in an interview in Dubai after the deal was announced. "It was a win-win situation."

VietJet flies 35 routes in Southeast Asia and to China, using 29 Airbus planes. The new planes will be used to expand the carrier’s destinations in Asia, including to South Korea and Japan, Thao said. She also hinted at horizons further abroad.

"Also in our plans is to consider suitable aircraft for the Middle East," Thao said. "This is still in planning."

The planes will be delivered between 2016 and 2020, with financing provided by leading banks and lessors including GE Capital Aviation Services Inc. and Avolon Holdings Ltd., Thao said in a Dubai news conference. 

Numbers Rising

VietJet in June forecast its passenger numbers would rise 67 percent to 10 million this year. The company has announced plans to sell bonds and shares to fund expansion aimed at increasing its international routes and boosting its domestic market share to more than 50 percent.

“This additional order from the fast-growing airline Vietjet confirms the success of the A320 Family as the preferred choice for airlines in the single-aisle market," Airbus sales chief John Leahy said in the statement announcing the purchase. 

As is common in the industry, VietJet will pay less than list price for the planes, Leahy said at the Dubai news conference.

Vietjet will buy 30 CFM56-5b engines for the planes for about $660 million, the carrier said in a separate e-mailed statement.

(An earlier version of this story was corrected to reflect the proper day of the release.)

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