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Vietnam Air and Boeing Close to $10 Billion Agreement for 50 737 Max Planes, Bloomberg Reports

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Vietnam Airlines to Purchase 50 Boeing 737 Max Jets in $10 Billion Deal

Vietnam Airlines is set to sign an initial agreement to acquire approximately 50 Boeing 737 Max jets, in a deal valued at $10 billion, according to a report by Bloomberg News. This announcement comes in confirmation of a previous report by Reuters, revealing Boeing's plans to sell 50 of its 737 MAX planes to Vietnam. The deal news coincided with U.S. President Joe Biden's visit to Hanoi. Both Boeing and Vietnam Airlines have yet to respond to requests for comment.

A Growing Aviation Market

Vietnam, which lifted COVID-19 travel restrictions, emerged as the world's fifth fastest-growing aviation market in 2022. The International Air Transport Association (IATA) predicts that the country will serve 150 million air transport passengers by 2035. This growth potential has attracted the attention of Boeing, as they have already secured a deal with Vietnam Airlines' competitor, VietJet, for the sale of 200 of their 737 MAX planes.

Recovery from Grounding

Boeing's 737 Max jets faced worldwide grounding for several months following two fatal crashes in Indonesia and Ethiopia in 2018 and 2019. However, the planes returned to service by the end of 2020, and this deal with Vietnam Airlines signifies a vote of confidence in their safety and reliability.

Financial Challenges and Diversification

Vietnam Airlines has faced financial difficulties, recording a net loss of 1.3 trillion dong ($53.96 million) in the second quarter of this year. The carrier attributes these losses to rising fuel prices and other financial risk factors. In addition to aircraft sales, Boeing has been engaged in discussions with Vietnamese authorities, along with other U.S. defense companies, regarding the potential sale of military equipment, including drones and helicopters. This diversification of business opportunities showcases Boeing's commitment to expanding its presence in Vietnam.

Strengthening Partnerships

Based in Arlington, Virginia, Boeing has already established relationships with six suppliers in Vietnam and is actively working to enhance their capabilities. This not only supports the growth of the aviation industry in Vietnam but also fosters stronger partnerships between Boeing and Vietnamese companies. In conclusion, Vietnam Airlines' agreement to purchase 50 Boeing 737 Max jets marks a significant milestone in the country's aviation industry. The deal highlights the growth potential of Vietnam's market and signifies a recovery for Boeing's 737 Max jets following their grounding. As Boeing strengthens its presence in Vietnam, it opens up opportunities for further collaboration and diversification in the aerospace sector.

Conclusion: Implications for New Businesses

The $10 billion deal between Vietnam Airlines and Boeing for the purchase of 50 Boeing 737 Max jets is a significant development that could have far-reaching implications for new businesses. This deal not only underscores the recovery and resilience of Boeing's 737 Max jets but also highlights the burgeoning growth potential of Vietnam's aviation market.

Opportunities in the Aviation Sector

For new businesses in the aviation sector, this deal presents an opportunity to tap into a rapidly growing market. With Vietnam emerging as the world's fifth fastest-growing aviation market, there is ample scope for businesses to offer ancillary services, ranging from maintenance, repair, and overhaul (MRO) services to in-flight catering and ground handling services.

Boost for Aerospace Manufacturing

The deal also signals a boost for aerospace manufacturing businesses. Boeing's commitment to enhancing the capabilities of its six suppliers in Vietnam could spur growth in the local aerospace manufacturing industry, creating opportunities for businesses in this sector.

Lessons for New Businesses

Furthermore, the deal offers valuable lessons for new businesses. It underscores the importance of resilience in the face of adversity, as demonstrated by Boeing's recovery from the grounding of its 737 Max jets. It also highlights the value of diversification, as seen in Boeing's discussions with Vietnamese authorities for the potential sale of military equipment. In conclusion, the Vietnam Airlines-Boeing deal is a significant development that could create a ripple effect of opportunities for new businesses in the aviation and aerospace sectors. Businesses that can seize these opportunities and navigate the challenges could stand to gain in this growing market.
Story First Published at: https://www.cnbc.com/2023/09/10/vietnam-air-boeing-near-10-billion-deal-for-50-737-max-planes-bloomberg-reports.html
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