Airline News
Search for strategic investor in Vietnam Airlines nears end
November 11th 2014
Vietnam Airlines (VNA) chairman Pham Viet Thanh said the government-owned airline has received applications from two strategic foreign investors to acquire 282 million shares, equivalent to 20% of its charter capital. Read More »
Under a separate initiative, the government is launching an initial public offering (IPO) scheduled to begin November 14, releasing a further 5% of the carrier’s shares to individual investors and employees. While the government will initially retain 75% of the carrier, it plans to eventually reduce this to 65% “if the business operations of VNA run well,” a Ministry of Transport spokesman said.
VNA says it is currently still inviting more applications and will not disclose the names of the two that have already made submissions until all offers are in. The carrier has previously held discussions with All Nippon Airways (ANA), so many analysts believe the Japanese carrier to be among those tendering.
According to VNA’s prospectus, strategic investors must hold their stake for at least five years, and cannot own part of a rival Vietnamese carrier at the same time. The government will divide applicants into two categories—airlines and financial companies. The criteria to be considered for airlines will include network, brand, technology, product and cooperation potential, while for other companies the criteria will include “financial capacity” and investment experience in the airline industry.
Potential investors for the second round of the process are due to be selected by December 8, and final binding bids are to be received by January 17. A preferred investor will be chosen for negotiations by February 16, and the contract is expected to be signed by March 3.
In the prospectus, the airline said its priority will be finding an investor from the airline category, although it says that “if the negotiations [with airlines] do not succeed, we will move on to … foreign financial investors.”
From 2008-2013, VNA has grown at an average annual revenue growth rate of 15.8%, while the average gross profit rate amounted to 10.7%. It currently deploys its fleet of 84 aircraft to the 400 slots it owns at its 29 international destinations.
VNA will be the first Southeast Asian launch customer of the A350-900 in early 2015. The SkyTeam alliance member aims to become Southeast Asia’s second-biggest full-service carrier by the end of the decade as it looks to more than double its fleet in a bid to surpass Thai Airways International and Malaysia Airlines.
