VietNamNet Bridge – Several organizations look to become strategic investors in Vietnam Airlines Corporation (VNA) when the national flag carrier launches its initial public offering (IPO) on November 14, top executives said.

An aircraft of Vietnam Airlines sits at the Noi Bai International Airport. Vietnam Airlines is expanding its fleet and raising service quality

Two investors have emerged as strong candidates, VNA leaders said at a meeting held in HCMC on October 30 to introduce the IPO.

At the event, most of the investors were curious about the criteria set out by VNA to select strategic shareholders.

Pham Viet Thanh, board chairman of the airline, said some investors had shown keen interest in VNA. However, as negotiations are ongoing, their names could not be released. Two investors have registered to be strategic shareholders but the number of strategic investors cannot exceed three, Thanh added.

Regarding the criteria, Vu Anh Minh, deputy head of the business management department under the Transport Ministry, said VNA and his ministry had agreed that the strategic investors must be financially strong and commit to long-term partnership with the airline.

The target strategic investors should be international airlines or financial corporations. Minh said in the case of an airline, it must have an extensive flight network; good brand, services and governance; and advanced aviation technology while sharing the common vision with VNA in terms of business and management.

Meanwhile, eligible financial institutions must have big financial resources and experiences in aviation investment.

Responding to questions about VNA’s post-IPO business plan, Pham Ngoc Minh, general director of VNA, said the airline would expand its fleet to 116 jetliners in 2018, with wide-body aircraft doubling to 38.

By the end of 2018, the airline will have 30 new aircraft so as to become a four-star carrier and a leader in the aviation sector in Asia.

VNA will continue to invest in Jetstar Pacific to compete in the low-cost segment and will not divest its capital from this budget carrier, Chairman Thanh said.

According to analysts of BIDV Securities Company (BSC), VNA still has some weaknesses such as limited earnings from domestic air services, and lower service quality than other regional airlines. In addition, the ratio of debt to equity remained high, at 4.92 in the past three years.

As of the end of last year, long-term debts at VNA totaled over VND37.8 trillion. However, the firm seemed to handle interest payment well.

On the other hand, VNA’s fixed operating costs were high while financial and capital capacity is limited.      

Vietnam Airlines will launch its initial public offering (IPO) via auction on November 14 with 49 million shares on offer at a starting price of VND22,300 each.

SGT/VNN