VietJet's Airbus Order Surge: A Gateway to Asia's Aviation Renaissance and Supplier Opportunities

The rapid recovery of Southeast Asia's travel demand is driving a historic expansion in regional airline fleets, with VietJet's recent firm orders for 40 Airbus A330neo widebody jets and 96 A320neo Family narrowbodies (totaling 136 aircraft) serving as a bellwether for industry momentum. These orders, finalized ahead of the 2025 Paris Air Show, underscore the region's pent-up demand for air travel and open a window for investors to capitalize on undervalued aerospace suppliers.

The Order's Implications for Regional Aviation Demand

VietJet's fleet expansion reflects Southeast Asia's post-pandemic rebound, with the airline targeting 8% annual passenger growth through 2030. The A330neo orders, in particular, enable VietJet to tap into long-haul markets, such as Europe and Australia, while the A320neo Family supports regional connectivity. This aligns with broader trends: Asia-Pacific air traffic is projected to grow 4.5% annually through 2027, outpacing global averages.

The orders also highlight VietJet's strategic pivot to premium capacity. With 70% of its current fleet operating domestic routes, the A330neo's 13,300-km range and 335-seat capacity will decongest key hubs and open new international routes. This shift is critical as regional competitors like Malaysia's AirAsia and Thailand's Thai Airways modernize their fleets.

Airbus vs. Boeing: Competing for Asia's Sky

VietJet's Airbus-centric strategy contrasts with its $30 billion Boeing 737 MAX order (200 aircraft), signaling a diversification play to balance geopolitical risks. While Boeing dominates the narrowbody market, Airbus's total backlog in Southeast Asia has surged to 1,200 aircraft, reflecting its edge in widebody and fuel-efficient designs.

The A330neo's 50% sustainable aviation fuel (SAF) compatibility (targeting 100% by 2030) positions it as a climate-conscious choice for regulators pushing emissions cuts. Meanwhile, Boeing's MAX 8—designed for shorter routes—faces stiff competition as airlines prioritize range over cost savings.

Investing in Aerospace Suppliers: Where to Look

The VietJet-Airbus deal creates opportunities to profit from supply chain bottlenecks and material demand spikes. Key sectors include:

1. Engine Manufacturers:
2. Rolls-Royce (RR.L): Supplies Trent 7000 engines for the A330neo. Despite valuation multiples at 12x forward earnings (vs. peers at 15x), its backlog has grown 18% since 2023. Risks include delays in Trent XWB production for the A350.

3. CFM International (GE + Safran): Powers A320neo engines. GE's stock trades at 6x EV/EBITDA, undervalued relative to its $50B defense backlog.

4. Advanced Materials:

5. Spirit AeroSystems (SPR): Supplies composite wings and fuselages. Its P/E of 10.5 vs. 14 for Boeing highlights undervaluation. However, labor strikes at its Kansas plant threaten delivery timelines.

6. Sustainable Aviation Fuel (SAF):

7. Neste (NESTE.HE): A leader in SAF production, with 30% of global capacity. Its EBITDA margins hit 15% in 2024, but scaling requires $2B in capex by 2027.

Valuation and Risks: A Cautionary Note

While the pipeline is robust, execution risks loom large:
- VietJet's Debt Crisis: A $181M dispute with FitzWalter Capital and cash reserves of only $175M as of Q4 2024 raise liquidity concerns.
- Supply Chain Delays: Airbus's A320neo backlog is 2,500 aircraft, with delivery delays averaging 8 months.
- Geopolitical Headwinds: U.S.-Vietnam trade tensions could shift orders toward Boeing, weakening Airbus's regional dominance.

Catalysts to Watch

• Paris Air Show (June 16–22, 2025): Expect announcements on VietJet's SAF partnerships and potential Boeing-Airbus order splits.
• Delivery Milestones: Airbus aims to deliver 800 narrowbodies in 2025; delays could pressure suppliers' margins.
• VietJet's Debt Resolution: A settlement with FitzWalter by year-end would boost investor confidence.

Investment Thesis

The VietJet-Airbus partnership is a buy signal for aerospace suppliers with exposure to Asia's growth. Prioritize companies with:
- Strong order backlogs (e.g., Rolls-Royce, Spirit AeroSystems).
- SAF scalability (e.g., Neste).
- Low valuations relative to peers.

Avoid pure-play Boeing suppliers until U.S.-Vietnam trade dynamics stabilize.

Conclusion

VietJet's Airbus orders are not just a fleet upgrade—they're a roadmap to Asia's aviation renaissance. Investors who target undervalued suppliers in engines, materials, and SAF stand to profit from this secular trend. However, success hinges on navigating VietJet's debt risks and supply chain bottlenecks. The Paris Air Show will be the first test of whether this vision takes flight.