Vietnam Airlines has recently kicked off the process of selecting strategic partners, which will last for six months, according to the Vietnam Investment Review (VIR).

President of Vietnam Airlines Pham Ngoc Minh said several foreign investors have expressed their interests in becoming the company’s strategic partners. According to Minh, investors would be classified based on their final tender offers in respect to the value and the volume of stake they would hold in the airline; the potential investors would include both airline businesses and financial organisations. “Our approach in finding strategic investors is that these investors need to accompany us in the long-haul and promote our aviation core values,” Minh told the VIR.

VIR quoted a source from the Ministry of Industry and Trade as saying that despite holding a maximum 20 percent stake, the strategic partners could still play an important role in governing the parent company Vietnam Airlines in the post-equitised period. According to appraisals by Vietnam Airlines’ consultant firm – the Bank for Investment and Development of Vietnam Securities Company (BSC), the expansive air route network Vietnam Airlines has developed over nearly two decades is an asset, and also the company’s greatest appeal to investors. Positioned mid-way to Northeast Asia, Southeast Asia, Europe, South Pacific and China, Vietnam could be seen as a gateway to a range of regions.

By the end of 2013, the carrier operated an international network consisting of 52 routes to 29 destinations in 17 countries and territories, and a local network of 39 routes to 21 destinations. Another significant advantage lies in the airline holding one of the world’s youngest fleets. Its current fleet of 82 aircraft will be joined by new state-of-the art A350-900s and B787-9s from next year which will help bolster its competitiveness while slashing operating costs.

Vietnam Airlines was the second airline in the world to use A350-900s that can save up to 25 percent of fuel over most commercial jets. “Over the last 20 years, we have witnessed the remarkable development of Vietnam Airlines, with its rapidly growing network and investment in a modern fleet of aircraft. As a member of SkyTeam, Vietnam Airlines is making its mark globally,” Tony Tyler, CEO of the International Air Transport Association (IATA), was quoted by VIR as saying at a Hanoi workshop this August.

Experts assume that the attraction of Vietnam Airlines also lies in its key position in the domestic aviation market as by the end of 2013, the company held more than 50 percent passenger transport market share, and 63.2 percent market share on local passenger routes. “Despite facing fierce competition from low-cost VietJet, Vietnam Airline’s position in local route passenger transport is unlikely to change in the near future as the company, apart from acting as a major shareholder in budget carrier Jetstar Pacific, possesses complete logistics services that keep business high profitability,” said an aviation expert.

Vietnam Airlines will list based on chartered capital of 14,101 billion VND (671 million USD) after being equitised, equivalent to more than 1.41 billion shares with a par value of 10,000 VND per share. The state will maintain a 75 percent stake with just 20 percent will be sold to strategic investors. A meagre 49 million shares, equivalent to 3.465 percent, will be set aside for public auction, with the remainder offered as incentives for the company’s employees and the members of its trade union.

VIR/VNN