Vietjet inks $1.2 billion financing agreements for fleet expansion

By Quynh Chi - Oct 11, 2018 | 05:40 AM GMT+7

TheLEADERVietjet has signed and exchanged an aircraft financing agreement for its 10 brand new aircraft with Japanese firms and two French banks namely BNP Paribas and Natixis.

Vietjet inks $1.2 billion financing agreements for fleet expansion
Vietjet Vice President Dinh Viet Phuong (1st row, center) exchanges the aircraft financing agreements with the representatives of Japanese companies.

Vietjet and Mitsubishi UFJ Lease & Finance Company Limited, a member of Japan’s leading finance group Mitsubishi UFJ Financial Group, and the banking group BNP Paribas(France) on October 10 signed and exchanged an aircraft financing agreement, paving the way for these organizations to finance Vietjet’s acquisition of up to five brand new aircraft, worth $614 million, according to the manufacturer’s listed price.

The new-age carrier, France-based banking group Natixis and some Japanese equity underwriters signed a Memorandum of Understanding valued at $625 million, according to the manufacturer’s listed price, to facilitate financing for five additional aircraft.

These deals have been made under a financing plan for Vietjet’s future ownership of the aircraft. All the financed aircraft would be delivered to Vietjet in the last quarter of 2018 or early 2019.

The acquisition of all these aircraft is part of a new-and-modern aircraft contract signed earlier between Vietjet and Airbus and includes A321neo aircraft, which incorporates the latest in engine design, advanced aerodynamics, and cabin innovations. 

According to the aircraft manufacturer, A321neo engines offer a significant reduction in fuel consumption — at least 16 percent from day one and 20 percent by 2020 as well 75 per cent reduction in noise and a half in emissions.

Under the terms of the agreement, Vietjet and all financing partners will also work together to share best practices for the operation and management of the airline, boosting effectiveness and encouraging sustainable growth.

Also on the same day, Vietjet announced the airline’s three new routes linking Vietnam with Japan, contributing to the growth of tourism and trade between the two countries and across the region.

The brand would launch the three routes in the coming three months. The Osaka - Hanoi route will commence operations on November 8, 2018, the Osaka - Ho Chi Minh City route on December 14, 2018, and the Tokyo - Hanoi route on January 11, 2019. All routes are operated with a daily return flight each.

Vietjet has already worked with Japanese partners to organize several flights from Vietnam to airports in Osaka, Narita, Sendai, Nagoya, Komatsu, Ibaraki, and Fukushima. 

According to Prime Minister Nguyen Xuan Phuc, the launch of Vietjet’s routes from Vietnam to the Kansai region of Japan on this occasion has great significance in sharing the cause to rebuild Kansai’s economy and tourism after being devastated by the storm in early September, and contributes to the tourism, trade and integration development between the two countries and in the region.

Meanwhile, Commissioner of Japan Tourism Agency Hiroshi Tabata said that the new routes would contribute to an increase in the number of Vietnamese visitors coming to Japan.

Currently, Vietjet operates 60 A320, A321 aircraft with more than 385 flights daily, carrying more than 65 million passengers to date, with 101 routes covering destinations across Vietnam and international destinations such as Japan, Hong Kong, Singapore, South Korea, Taiwan, mainland China, Thailand, Myanmar, Malaysia, and Cambodia.

The airline has plans to expand its flight network across the Asia-Pacific region and has signed contracts to buy new-generation aircraft from prestigious global plane manufacturers.