VietJet Delays Aircraft Loan Repayments

Low-cost carrier VietJet has managed to secure deferrals of loan payments from most of its lenders. The airline said Friday that it had negotiated 30-70% cuts on prices and service fees, as well as the extension of payment terms. 

VietJet A321 Da Nang
Low-cost carrier VietJet has secured deferrals on loan payments. Photo: VietJet

An extensive order book

As reported by FlightGlobal, Vietnamese low-cost airline VietJet has secured a delay of loan repayments for funds it has borrowed for aircraft purchases. The carrier has orders for 124 Airbus A321 (neo and XLR), 120 737 MAX 8s, and 80 MAX 10s. 

“Up to now, VietJet has reached agreements to extend three…to 12 months’ payment time of 75% to 80% of aircraft agreements with international aircraft financial institutions, credits from HSBC, Citibank…and big domestic banks,” the carrier said in an e-mailed statement. 

The carrier further commented that this reprieve would allow it to expand its financial resources, focusing on improving its quality of service, cargo business expansion, and developing e-commerce and cost management solutions. It has also implemented a fuel hedging program in order to “stabilize fuel costs,” which account for over 40% of its operating expenses.

VietJet does not fly long-haul international routes, however, that could change with the A321XLR. Photo: VietJet

Airbus orders

VietJet has an extensive order book, from both large plane manufacturers. VietJet is set to be among the first airlines to receive the A321XLR from Airbus, of which it ordered 20 in August last year. This was in addition to the 104 A321neos already agreed upon. Originally, this was 15 and 109, but five A321neos were converted to the XLR model with the later order. 

The addition of the new XLR single-aisle aircraft will allow VietJet to further expand its network, flying longer routes across Asia as well as to destinations as far away as Australia and Russia.

VietJet has ordered no less than 200 737 MAX planes. Photo: Boeing News Room.

Boeing orders

In 2016, the airline announced Vietnam’s largest ever commercial airplane purchase at the time with an order for no less than 100 Boeing 737 MAX 8s. This agreement was witnessed both by Vietnam’s then-president, Trần Đại Quang, and his then American counterpart, Barack Obama. The deal was valued at approximately US$11.3 billion. 

It has since placed further orders with Boeing for another 20 MAX 8 planes, and 80 MAX 10s. Of course, the progress of the MAX has since been put into jeopardy, and VietJet seems less than keen to advertise its acquisition. In fact, the airline was spotted renaming the model as it rolled out of the paint shop in December last year.

Irregular circumstances

Today (under normal circumstances) the airline operates a fleet of 75 A320 and A321 aircraft, with an average age of close to four years. Usually, it runs around 400 flights daily, carrying 80 million passengers per year, Due to the current crisis however, it is running only a bare-bones schedule with a very limited domestic service and cargo flights. 

Have you flown with VietJet? What was your experience? Are you excited about the prospect of long-haul single-aisle flights with the A321XLR? Let us know in the comments.