Vietnam Airlines in share sales talks with foreign investors

Bloomberg

Vietnam Airlines Corp. will offer more shares to foreign investors, including possibly another airline, as it prepares a listing on the Ho Chi Minh City Stock Exchange next year and the government plans to cut its holdings to 51 percent.
The carrier—which sold an 8.8 percent stake to ANA Holdings Inc. last year for $108 million—is discussing the sale of another 4.1 percent stake as early as this month with potential investors, Vietnam Airlines CEO Duong Tri Thanh said. Japan’s largest airline, which is limited by Japanese regulation to a 10 percent stake in Vietnam’s national carrier, may be interested in “other opportunities in our subsidiaries,” he said.
“The share sales will enable Vietnam Airlines to continue implementing an ambitious investment plan of expanding and upgrading its fleet and improving overall service quality,” Thanh said in a separate interview. The first batch of shares from the additional stake sale could be sold later this year or in 2018, he said.
The state-owned airline, currently listed on Hanoi’s Unlisted Public Company Market plans to also list on the country’s benchmark stock exchange in Ho Chi Minh City next year, he said.
Vietnam Airlines is expanding its fleet in an air-passenger market that the International Air Transport Association (IATA) estimates will be among the world’s top five fastest-growing in the next 20 years. The government, which has said it will reduce its stake in Vietnam Airlines to 51 percent around 2019 to 2020, from about 86 percent now, is looking to strengthen tourism as a key industry to boost economic growth as the number of foreign visitors surges.
The carrier expects the number of international air passengers to Vietnam to be around 32 million in 2018, a 12 percent increase from this year, Thanh said. The airline forecasts that domestic travellers by air will rise 12 percent next year to 35 million, as economic growth makes travel affordable for more Vietnamese. The government forecasts Vietnam’s growth at 6.5 percent to 6.7 percent next year, among the fastest pace worldwide. Vietnam Airlines projects its 2018 revenue will jump about 13 percent from this year, while profit before tax may be “at least” $70 million, Thanh said. He predicted that the airline will see about 10 percent passenger growth next year from 22 million in 2017.
Vietnam Airlines has been transforming its fleet with the new widebody planes from Airbus SE and Boeing Co. and to fend off competition from VietJet Aviation Joint Stock Co, the nation’s largest private carrier.
Vietnam Airlines plans to have 110 aircraft by 2020 and 150 planes by 2030 from 92 planes now, according to Thanh.