Saturday, October 20, 2007

Vietnam Airlines told to finalize Boeing and Airbus deals

HANOI (AFP) — Vietnam on Friday ordered the state-run airline to finalise contracts before the end of the year with Airbus and Boeing to buy planes with a total catalogue price of nearly six billion dollars.

Prime Minister Nguyen Tan Dung also gave the go-ahead for Vietnam Airlines to partially privatise, boost its fleet to 107 planes by 2020 and re-develop its subsidiary airline, the government said in a statement on its website.

Dung has told the flag carrier to enter, through a bidder, into "direct negotiations with Boeing on the contract to buy 12 B787-8s, finalising the signing of contracts before November 16," the statement said.

He also said the Airbus contract to buy 10 A350-900XWBs and 20 A321s should be finalised before December 21, according to the statement.

Vietnam Airlines early this month announced preliminary agreements for the large-scale passenger aircraft orders, struck by Dung during recent visits to the United States and France.

The exact costs were not announced, but the 30 Airbus jets have a total catalogue price of nearly 3.8 billion dollars, while the Boeing deal would be worth about two billion dollars at full cost for each jet.

Air travel is taking off in the communist-ruled country of 84 million people, where the economy is growing at over eight percent a year.

Vietnam Airlines now operates 45 aircraft but wants new planes to compete against a slew of foreign carriers and budget airlines. It plans to launch five weekly direct flights to Los Angeles by the end of next year.

The carrier now operates 10 Boeing 777s, 10 Airbus A320s, 10 A321s, three A330s, 10 French-made ATR-72s and two Fokker-70s. It will receive five more A321s next year and four Boeing 787-8 Dreamliners from 2009.

The airline will also buy five more ATR-72s, the report said.

Under a modernisation plan agreed by Dung on Thursday, Vietnam Airlines will be allowed to expand its fleet to 60 planes by 2010, 85 by 2015 and 107 planes by 2020, subject to market conditions, the statement said.

The prime minister agreed to disburse 904 billion dong (56.5 million dollars) from the state budget to pay for the four Boeing Dreamliners ordered in 2005.

Dung also assigned the finance ministry to implement the previously announced partial privatisation of Vietnam Airlines.

The ministry would guarantee all loans to buy planes and engines by the airline and the newly-established Vietnam Aircraft Leasing Joint Stock Company.

The prime minister also allowed Vietnam Airlines to establish a partly private company by reorganising subsidiary Vietnam Air Service Co. (VASCO).

The new company would be formed with the participation of the Vietnam Plane Leasing Joint Stock Company, the Vietnam Bank for Investment and Development and other shareholders, the official statement said.

Industry sources have said Vietnam is planning to turn VASCO into a low-cost carrier to take on Pacific Airlines, part-owned by Qantas, and AirAsia, now in partnership with ship-builder Vinashin.