Citibank, Vietnam Airlines ink US$560 million loan deal to buy aircraft

[HO CHI MINH CITY] Citibank has signed a memorandum of understanding (MOU) to provide Vietnam Airlines at least US$560 million to partially finance what’s expected to be Boeing plane purchases, as the South-east Asian nation touts US aviation and finance ties as part of key tariff negotiations.

The signing took place on Wednesday (Apr 9) during Vietnam Deputy Prime Minister Ho Duc Phoc’s visit to the US to “strengthen bilateral trade cooperation, including mobilising funds for key projects of state-owned enterprises such as Vietnam Airlines”, said Le Duc Canh, the carrier’s vice-president who was part of the Vietnamese delegation.

Representatives of the national carrier are set to have a meeting with the US Export-Import Bank on Thursday about getting loan guarantees, said Canh. Citibank will provide strategic consulting to Vietnam Airlines, according to a joint company statement.

Phoc met with US Trade Representative Jamieson Greer in Washington on Wednesday and agreed to start negotiations on a trade agreement, after export-reliant Vietnam offered to remove all tariffs on US imports following the announcement of a 46 per cent levy on the South-east Asian nation. That’s now been put on pause for 90 days.

Vietnam Airlines is working to move ahead with a US$10 billion 2023 commitment to buy 50 Boeing 737 Max aircraft, Canh said. The airline plans financing for a sale and leaseback of 25 of the narrow-body aircraft, he said. Such transactions involve selling the aircraft to a third party, then leasing them back.

For the remaining 25 Boeing aircraft, Vietnam Airlines will explore financing options “such as export credit loans, loans backed by insurance company guarantees, or commercial loans”, Canh said.

Vietnam Air previously outlined a plan to raise around US$1 billion in capital. The fundraising will happen in two stages, the first of which will take place by the second half of 2025, said CEO and president Le Hong Ha. BLOOMBERG