Booming Demand Spurs Order Now

Recognizing a possible backorder on aircraft--Vietnam plans to buy a dozen Boeing 787s to meet growing demand for air travel in the booming Southeast Asian country, the Associated Press said Friday. Vietnam Airlines will purchase four of the planes and a new joint venture called Vietnam Aircraft Leasing Co. will purchase eight, company officials announced. They expect to sign the deals soon.

State Owned Vietnam Airlines and Chicago-based Boeing Co. declined to disclose the price of their deal. The new JV airline VALC said it would pay $1.42 billion for its eight planes.

Airlines wishing to improve their safety image in Southeast Asia are lining up to buy new planes, said Pham Ngoc Minh, vice president of Vietnam Airlines and chairman of VALC. "If we don't make a quick and bold move now, the delivery of the planes would have to be pushed back further," Minh said.

VALC consists of five large state-owned Vietnamese companies, including Vietnam Airlines which is the biggest stakeholder with 23 percent. VALC indicated it will lease its 787s to Vietnam Airlines upon delivery in 2014. Vietnam Airlines had already previously ordered four 787s in 2005.

Two years ago Vietnam Airlines said it planned to have 80 planes by 2015 and 110 by 2020. Vietnam Airlines now has only 46 aircraft in its fleet. The rapid pace of economic growth in Vietnam is also credited for the decision, said Minh. A surge in the regions economy may instigate more aircraft orders, he added.

In September, Vietnam Airlines signed a memorandum of understanding with Airbus to buy 10 A350-900 plus 20 smaller A321s. Vietnam a new member of the World Trade Organization, has been implementing free-market reforms, and its economy is now among the fastest growing in the world, increasing by more than 8 percent last year. Foreign investments and tourism have spurred its growth, according to the Associated Press.

Vietnam's air transport market has grown an average of 15 percent per year in recent years said Vietnam Airlines spokesman Trinh Ngoc Thanh.

FMI: www.vietnamairlines.com