Citi supports Vietnam Airlines’ expansion
Citi has lately inked an aircraft financing loan with Vietnam Airlines, allowing the latter to purchase two Airbus A321s from Airbus SAS (Airbus), in a bid to expand the airline’s fleet and operation.
Accordingly, an Export Credit Agency (ECA) facility of US$114 million has been arranged by Citi with the support of European ECAs and fronted by Euler Hermes, the German ECA, to purchase two (2) A321-200 aircraft which were delivered in November and December 2015.
The facility benefitted from a sovereign guarantee from the Ministry of Finance of Vietnam, meaning cost savings through the Cape Town Convention Discount with the official inclusion of Vietnam in the Cape Town Convention country accession list as of October 27, 2015. Citi acted as mandated lead arranger for this ECA guaranteed loan financing.
“This finance package will enable Vietnam Airlines to accomplish its fleet renewal and expansion plan which aims to enhance our operating efficiency on both domestic and international routes.
This is in alignment with Vietnam Airlines’ strategic focus on short-haul and medium-haul expansion using our A321 fleet,” said Pham Ngoc Minh, president and CEO of Vietnam Airlines. “We strongly believe that this credit facility agreement between Vietnam Airlines and Citi – a leading global financial firm – will enhance our long-lasting partnership and enable Vietnam Airlines to complete its realisation of the development strategy, becoming one of the Asia’s carriers of choice by 2020.”
Natasha Ansell, managing director of Citi (Vietnam) said, “It is our privilege and pride to be the ECA arranger for Vietnam Airlines, to purchase from the very first to very final A321 aircraft in a series of 26 A321 fleet that Vietnam Airlines has contracted with Airbus in the period of 2011-2015. This transaction marks the 5th ECA-guaranteed loan facility which Citi has arranged for Vietnam Airlines since 2003.”
“This important transaction will support the company’s expansion and increase the capacity of Vietnam Airlines’ fleet in an effort to better meet the demand of passenger and cargo transport. As always, Citi remains committed to bring into the country our two-hundred-year expertise, our unrivalled global platform of technology and innovation and broadest spectrum of products and services to better serve such a valued client as Vietnam Airlines,” she noted.
As a major part of the fleet, the A321 family proves to be the most suitable and effective type given its state of the art technology that helps the airline not only cut maintenance costs and noise emissions but also save fuel. Vietnam Airlines signed the contracts with Airbus in 2007 and 2009 to purchase a total of 26 Airbus A321-231s for delivery during 2011-2015, in line with the plan to expand its fleet to 122 aircraft by 2020.
Vietnam Airlines has been successful in sustaining high load factors over the years. Throughout its development process, Citi has had a long-standing and multi-faceted relationship with Vietnam Airlines, including being the sole arranger for its first US Ex-Im Bank-backed financing for Boeing aircraft in 2003.
The transaction further highlights the strength of Citi’s strong relationship with Vietnam Airlines as the company continues to develop further with its ambitions of becoming one of the leading carriers in the region.