The project to invest in 50 narrow-body aircraft is a large and essential project of Vietnam Airlines, expected to help the airline achieve its strategic goals and vision.
Waiting for instructions
The order, procedures, authority to approve and decide on the investment policy of the project to invest in 50 narrow-body aircraft of Vietnam Airlines have added essential signs if following Official Dispatch No. 153/BXD -VT&ATGT (Official Dispatch No. 153) that was just sent by the Ministry of Construction to the Ministry of Finance this weekend.
In mid-February 2025, the Ministry of Planning and Investment (now the Ministry of Finance) sent an official dispatch to the Ministry of Transport (now the Ministry of Construction) to provide clear comments on whether the Project must carry out procedures for submission to the Prime Minister for approval/decision on investment policy or not, to summarize and guide Vietnam Airlines.
Previously, in Official Dispatch No. 888/VPCP - CN dated February 6, 2025, Deputy Prime Minister Tran Hong Ha assigned the Ministry of Planning and Investment to preside over and coordinate with the Ministry of Finance, the Ministry of Transport, and the State Capital Management Committee at Enterprises to guide Vietnam Airlines on two contents related to the order, procedures and authority to implement the Project to invest in 50 narrow-body aircraft.
NOTE: The number of narrow-body aircraft is being calculated based on the assumption of an aircraft type with a configuration corresponding to the current A320/A321 fleet, the number may change, depending on the aircraft type used.
It is expected that after 2025, Vietnam Airlines will gradually sell its ATR72 fleet and is studying the option of replacing this fleet with a regional jet fleet. The above aircraft demand includes an assessment of the impact of high-speed railway and North-South expressway projects.
Firstly, the order, procedures and authority to implement the Project of investing in 50 narrow-body aircraft must be carried out in accordance with the provisions of the Investment Law, or the Law on Management and Use of State Capital Invested in Production and Business at Enterprises, or Decree No. 101/2011/ND-CP on the management of leasing and purchasing of aircraft, engines, spare parts and supplies and maintenance and repair services for aircraft, engines, spare parts and supplies.
Second, in cases where the Prime Minister has the authority to approve/decide on investment policies, it is necessary to clearly guide the procedures, documents and appraisal/advisory agencies for the head of the Government to consider and decide.
The deadline for completing the comment work on the Project is before February 15, 2025.
In Official Dispatch No. 153, regarding the approval of the investment policy of this project, the Ministry of Construction cited 2 provisions of the Investment Law.
Accordingly, Article 3 of the Investment Law stipulates: “An investment project is a set of proposals for medium- or long-term capital investment to carry out business investment activities in a specific area, within a specified period of time”.
Clause 1, Article 3 of the Investment Law stipulates: “Approval of investment policy is the competent state agency's approval of the project's objectives, location, scale, progress, implementation period; investors or forms of investor selection and special mechanisms and policies (if any) to implement the investment project”.
“Based on the above regulations, the Ministry of Finance is requested to study and determine whether the proposed content of Vietnam Airlines meets the criteria for determining an investment project or not, and whether it is subject to approval in principle or not, in order to handle it appropriately,” Official Dispatch No. 153 stated.
Regarding the authority to approve investment policies, the Ministry of Construction said that Point c, Clause 1, Article 31 of the Investment Law stipulates: "The Prime Minister approves investment policies for new investment projects in the business of passenger transport by air."
The Ministry of Construction requested the Ministry of Finance to study and determine whether the proposed content of Vietnam Airlines falls under the category of a new investment project in air passenger transport business or not for appropriate handling.
Regarding the authority and investment procedures as prescribed in Decree No. 110/2011/ND-CP, according to the Ministry of Construction, Clause 2, Article 6 stipulates: For projects to purchase aircraft and aircraft engines within the scope of regulation in Clause 1, Article 1, but not using state budget capital: The Board of Directors/Board of Members of the enterprise or the general director, director of the enterprise (in case the enterprise does not have a Board of Directors/Board of Members) decides on the investment. In the case of purchasing aircraft, the head of the enterprise makes the investment decision after receiving the Prime Minister's approval in principle".
Regarding investment procedures, the Ministry of Construction said that Clause 1, Article 14, Decree No. 110/2011/ND-CP also stipulates: the preparation, submission, appraisal, approval of investment projects and organization of implementation of aircraft investment projects shall comply with current regulations on investment.
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Essential Project
The project to invest in 50 narrow-body aircraft is a large, essential investment project that Vietnam Airlines has planned for a long time.
Specifically, in the period 2018 - 2020, Vietnam Airlines reported to competent authorities and carried out procedures to prepare for the investment project of investing in 50 narrow-body aircraft in the period 2021 - 2025.
However, due to the impact of the Covid-19 pandemic, there has been a serious cash flow deficit, causing a large surplus of aircraft in the 2020-2021 period and affecting the entire fleet development plan of the National Airline in the 2021-2025 period. Therefore, the Board of Directors of Vietnam Airlines had to temporarily suspend the implementation of this project.
Since 2023, the domestic and international aviation market has fully recovered compared to the pre-Covid-19 period and is maintaining an average growth rate of 5-6%/year, forcing Vietnam Airlines to restart the Project to ensure achieving the set goals and strategic vision.
In the proposal sent to the State Capital Management Committee at Enterprises in November 2024, Vietnam Airlines estimated that the total investment for the project to invest in 50 narrow-body aircraft of the A320NEO or B737MAX family and 10 spare engines is about 3.697 billion USD, equivalent to 92,810 billion VND. Vietnam Airlines plans to sell and lease back the first 25 aircraft received in the period 2028 - 2030 and use equity capital combined with loans to purchase at a loan rate of 50% of the aircraft purchase price for the remaining 25 aircraft received in the period 2030 - 2031. This structure will help Vietnam Airlines significantly reduce cash flow pressure.
Structure of Vietnam Airlines' current narrow-body fleet
Ownership: 33 A321 Ceo aircraft, fully depreciated in the period 2023-2031.
Lease: 33 aircraft, including 10 A321 Ceo aircraft with leases expiring from 2029 - 2031; 20 A321 Neo aircraft with leases expiring from 2033 - 2034; 3 A320 Neo aircraft with leases expiring in 2036.
“The airline determines the minimum scale of the Project to be 50 narrow-body aircraft and 10 spare engines to ensure meeting the needs of fleet development and gaining an advantage in negotiating commercial conditions, finance, post-purchase support, aircraft delivery and technical costs (engines, maintenance, warranty, spare parts, etc.) when purchasing large batches,” said a leader of Vietnam Airlines.
In Document No. 29/TTr - UBQLV sent to the Prime Minister proposing the investment policy for the project of investing in 50 narrow-body aircraft of Vietnam Airlines, the State Capital Management Committee at Enterprises (at that time still representing the state capital owner) said that the biggest obstacle in the project implementation process was determining the order and procedures for approving the investment policy.
Although Vietnam Airlines (the State holds the controlling stake) determined that the investment project of 50 narrow-body aircraft is not within the scope of Investment Law No. 61/2020/QH14, the order and procedures for project investment stipulated in Decree No. 110/2011/ND-CP are determined to be implemented in accordance with "current regulations on investment".
Based on research and review of relevant current legal regulations, the State Capital Management Committee at Enterprises found that, in order to ensure consistency in the approval of investment policies by competent authorities for the Project of investing in 50 narrow-body aircraft, Vietnam Airlines needs to complete the Project investment proposal report dossier according to the provisions of Article 33 and Article 35, Investment Law No. 61/2020/QH14.
In Submission No. 29, the State Capital Management Committee at Enterprises proposed that the Prime Minister assign the Ministry of Planning and Investment to preside over and coordinate with the State Capital Management Committee at Enterprises to appraise the Investment Proposal Report for the Project to invest in 50 narrow-body aircraft as prescribed in Articles 33 and 35 of the Investment Law.
In addition, due to the urgent nature of the Project, the appraisal process of the project investment proposal report by the competent authorities is allowed to base on the main solutions of the Report on the Overall Project of Solutions to Remove Difficulties Due to the Impact of the Covid-19 Pandemic for Vietnam Airlines to Quickly Recover and Develop Sustainably in the 2021-2035 Period, which was approved by the Government and reported at the 8th Session of the 15th National Assembly.
“Allow Vietnam Airlines to implement the Project according to the provisions of Clause 2, Article 14, Decree No. 110/2011/ND-CP: in special cases with the consent of the Prime Minister, enterprises are allowed to both develop investment projects and negotiate with aircraft manufacturers,” the representative of the State Capital Management Committee at enterprises proposed.
Source: https://baodautu.vn/vietnam-airlines-doi-chi-dan-cho-du-an-dau-tu-50-tau-bay-than-hep-d254766.html
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