Vietnam Airlines to Lease 20 A321neo Planes to Meet Demand

  • Airline flies record 20 million passengers this year
  • Carrier also plans U.S. flights starting with the West Coast

Vietnam Airlines Corp. plans to lease 20 A321neo aircraft to add domestic as well as regional flights after carrying a record number of passengers in one of the world’s fastest-growing aviation markets.

The Airbus planes, to be delivered starting 2018, will be used for flights within a five-hour radius, including the popular Hanoi-Ho Chi Minh City route, Chief Executive Officer Duong Tri Thanh said in an interview in Hanoi. Vietnam Air is leasing the planes from a number of companies, including Air Lease Corp, he added.

“The standard term to lease a new aircraft is 12 years and when you lease you just pay the operating lease monthly,” Thanh said Dec. 6. “You don’t have to borrow money, so it’s an efficient way.”

Vietnam Airlines is expanding in a market that the International Air Transport Association estimates will be among the top five fastest-growing in the next 20 years based on passengers added, as economic growth makes travel affordable for more people. Spurred by the prospects from millions of Vietnamese-Americans, the carrier, which has code-share agreements for some U.S. destinations, also plans to carry out its own flights to the U.S. by late-2018.

Vietnam Airlines is “working hard” on getting regulatory approval, Thanh said. The Hanoi-based airline will likely begin flying to West Coast cities such as Los Angeles, Thanh said.

Plane Models

The carrier is choosing between Boeing Co.’s 787 Dreamliner and the Airbus A350 for the U.S. route and has yet to decide whether it will be a nonstop flight, he said.

The 20 Airbus planes the carrier plans to lease will help it meet growing regional and domestic demand, Thanh said.

Vietnam Airlines and its affiliates Jetstar Pacific Airlines Aviation JSC and Vietnam Air Services Co., known as Vasco, have about 60 percent of domestic market share, according to the carrier’s data. Vietnam Air owns 70 percent of budget carrier Jetstar with Qantas Airways Ltd. holding the remaining 30 percent.

Thanh said the airline reached a record 20 million passengers for the year this week and predicts 10 percent passenger growth next year.

The flagship carrier is benefiting from a strong economy and growing middle class in a market that has been under-served, said Brendan Sobie, Singapore-based chief analyst at CAPA Centre for Aviation. Economic growth in Vietnam accelerated to 6.4 percent during the third quarter, from 5.8 percent in the previous three months, the General Statistics Office said Sept. 29.

The carrier is revamping its fleet as it adds international routes amid domestic rivalry from low-cost carrier VietJet Aviation Joint Stock Co. Vietnam Airlines will begin a Hanoi-Sydney direct flight in the second quarter next year, according to Thanh

In September, the national airline signed a deal to buy 10 A350 wide-bodied aircraft worth about $3.1 billion in list prices, while its affiliate Jetstar Pacific Airlines Aviation Joint Stock Co. agreed to purchase 10 A320s for about $980 million.

Thanh also said Vietnam Airlines expects to list about 1.2 billion shares on Hanoi’s Unlisted Public Company Market, known as UpCom, in the first quarter next year. The company sold an 8.8 percent stake to ANA Holdings Inc. in January for $108 million and is looking for more strategic investors.

Vietnam Airlines raised about $51.3 million from its November 2014 IPO, selling all 49 million shares offered at an average price of 22,307 dong ($1). The stock was equivalent to a 3.5 percent stake and valued the company at $1.5 billion at the time.

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