Nicholas Ionides/SINGAPORE Marc Lopatin/HO CHI MINH CITY

Vietnam Airlines is stepping up assessments of narrowbody and long-range widebody aircraft after securing government approval for the first stage of a 10-year fleet growth plan.

The state-owned carrier's expansion, tentatively approved by the government early this year, won backing from the country's prime minister early in May.

A senior Vietnam Airlines executive says the approval covers the first five years of the 10-year plan, which should ultimately see its fleet doubling to 46 aircraft. The first stage will see 12 aircraft added by 2005, including three ATR 72s ordered in January. The first new turboprop is due for delivery in September.

The remainder of the approved plan covers the acquisition of five narrowbody aircraft and four long-range widebody aircraft. The executive says assessment studies have been ongoing for a while but have been stepped up to cover Airbus A320-family aircraft or Boeing 737s, and Airbus A340s or Boeing 777s.

Airbus is seen as the most likely supplier for the five narrowbodies as the carrier already operates 10 A320s. The executive says Boeing is most likely to supply long-haul aircraft as a letter of intent was signed late last year covering the possible purchase of three 777s.

State-run media says the national carrier will spend VND19 trillion ($1.3 billion) on new aircraft by 2010, of which VND15 trillion will be spent by 2005. The airline aims to raise the number of aircraft in its fleet to 32 by 2005 and 46 by 2010, taking into account aircraft that will be returned to lessors. It hopes to own 18 aircraft outright by 2005 and 34 by 2010.

Vietnam Airlines will pay for the new aircraft from cash reserves over the 10-year period. To finance the deal the carrier will be exempt from paying corporation tax and will be able to issue debentures and mobilise public funds. The latter hints at a partial flotation on the fledgling Vietnam stock market.

Source: Flight International