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The order for 50 A321neo jets is part of an aggressive
investment in the Vietnamese airline's fleet that has provided
lucrative business for both Airbus and its U.S. rival Boeing.
It is also a boost for Airbus as it seeks to turn a raft of
provisional orders put together at July's Farnborough Airshow
into hard revenues, narrowing a gap against Boeing this year.
The deal is the biggest economic component of an official visit
to France's former colony by Philippe from Nov. 2-4, during
which he will oversee deals with French firms and hold talks
with Vietnamese counterpart Nguyen Xuan Phuc, they said.
Airbus and Vietjet both declined to comment.
Vietnam and France also signed an agreement in September to
expand defense collaboration, although details are scant.
VietJet CEO Nguyen Thi Phuong Thao told Reuters this week that
Vietjet plans to maintain an average fleet age of just three
years to keep fuel and maintenance costs low.
It placed provisional orders for the A321neo jets and 100 Boeing
737 MAX jets in Farnborough and has been negotiating to firm
them up, with deliveries expected between 2020 and 2025.
The formal signing, to take place on Friday, will help to dispel
doubts over the substance of deals announced in Farnborough,
which was marked by a rash of vague or incomplete order
announcements.
Finalizing such deals can involve tough negotiations as airlines
try to squeeze out last-minute concessions.
However, finance industry sources have expressed concerns about
a glut of orders in Southeast Asia from airlines like Vietjet,
Malaysia's AirAsia <AIRA.KL> and Lion Air of Indonesia and
question whether all of the several hundreds of planes on order
from the Asian low-cost carriers will actually be delivered.
Vietjet told the Airline Economics conference in Hong Kong this
week that low-cost airlines have a relatively low market
position in Vietnam, and that those most successful in driving
down unit costs would ride out any downturn in the market.
Vietnam's expansion has also been peppered with trade
sensitivities as Vietjet - which says it enjoys government
support - juggled Airbus and Boeing procurements: a strategy
also designed to win bigger discounts.
Two years ago, Boeing upstaged Airbus by clinching an order for
100 737s during a visit by then-U.S. President Barack Obama.
Until then, VietJet had only bought from Airbus, including an
order for 92 jets in 2013.
Philippe's visit is the latest example of Western leaders
beating a path to Asia's low-cost carriers, whose orders have
secured thousands of manufacturing jobs, trade experts said.
(Reporting by Tim Hepher, Anshuman Daga; Editing by Neil Fullick
& Simon Cameron-Moore)
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