Vietnam Airlines (HVN.HM) is expected to sign an initial agreement to purchase approximately 50 Boeing 737 Max jets in a deal valued at about $7.5 billion. This agreement comes as U.S. President Joe Biden visited Hanoi to strengthen ties between the two nations.
While the deal is worth up to $7 billion at list prices, bulk purchases often receive discounts. Boeing already has a deal with VietJet (VJC.HM), a rival of Vietnam Airlines, for the sale of 200 of its 737 MAX planes.
Vietnam’s aviation market has been growing rapidly, ranking as the world’s fifth-fastest-growing aviation market in 2022 when COVID-19 travel restrictions were lifted. The International Air Transport Association (IATA) predicts that Vietnam will serve 150 million air transport passengers by 2035.
Boeing’s 737 Max jets were grounded worldwide for several months following two fatal crashes in 2018 and 2019. They returned to service at the end of 2020.
Vietnam Airlines has faced financial challenges, recording a net loss of 1.3 trillion dong ($53.96 million) in the second quarter of 2023. The airline attributed these losses to rising fuel prices and other financial risk factors.
In addition to the aircraft deal, Boeing has been in discussions with Vietnamese authorities and other U.S. defense companies regarding the possible sale of military equipment, including drones and helicopters. Boeing is also working to expand the capabilities of its six suppliers in Vietnam.
