VietJetAir to finalise $9 bln Airbus order next month

Vietnamese carrier VietJetAir said it would finalize a $9 billion order for up to 92 Airbus aircraft next month as it seeks to tap into Southeast Asia’s fast growing low-cost market dominated by AirAsia Bhd and Lion Air.

In September, privately owned VietJetAir and Airbus agreed a provisional order for mostly A320 planes, but the deal did not show up on the order book of Airbus in its 2013 data.

“VietJetAir will sign a purchasing agreement with Airbus in Singapore next month to buy 92 aircraft,” said Luu Duc Khanh, VietJetAir’s managing director, confirming an earlier Reuters report.

“Signing the MOU last year was our initial step and this is a next step to make our development plan comes true,” he told Reuters.

A firm order is seen as a strong indication of future revenue for airplane manufacturers and triggers a deposit from airlines. Airlines mainly pay for aircraft when they take delivery and usually win significant discounts for large orders.

The latest deal worth $9 billion at list prices, includes firm orders for 62 medium-haul jets as well as options for 30 more. VietJetAir, an existing A320 operator, has said it also plans to lease eight more Airbus planes.

Vietnam’s fledgling airline industry is poised to boom as local competition heats up with fleet expansions, new routes and planned share offerings that are set to make it one of the world’s three fastest-growing markets. State-run flag carrier Vietnam Airlines dominates the local market.

An Airbus spokesman in Singapore said: “We don’t comment on discussions that may or may not be taking place with customers or reports of potential announcements.”

VietJetAir, which has been flying since December 2011, offers domestic flights and also flies to Bangkok. It has ambitious plans to develop into a regional airline, taking advantage of a boom in regional air travel.

Malaysia’s AirAsia Bhd and Indonesia’s Lion Air have similarly announced bold plans to expand their fleets and have captured market share from full service airlines.

A source familiar with the situation said the Airbus-VietJetAir deal would be one of the big orders to come out of the Singapore Airshow which starts on Feb. 9.

The aircraft will be delivered in phases over 10-12 years, with VietJetAir set to take delivery of the first few aircraft in the last quarter of this year, the source said.

The source did not wish to be identified as he was not authorised to speak to the media.