Vietnam Airlines to spend big on aircraft expansion

Vietnam Airlines to spend big on aircraft expansion

Vietnam Airlines Corporation will need nearly VND70 trillion (more than US$3.3 billion) for 2014-2018, including nearly VND63.3 trillion spent on aircraft purchases.

The spending on aircraft is part of the business plan which Vietnam Airlines has mapped out for the years after the state-owned corporation goes public based on a major aircraft expansion scheme for 2015 with a vision towards 2020 as approved by the Prime Minister.

To have finances for new aircraft, Vietnam Airlines under the Ministry of Transport has plans to increase its chartered capital to VND26.32 trillion in 2018 from more than VND14.1 trillion this year by selling shares to investors or its shareholders after equitization this year as scheduled.

The ministry has thrown support behind Vietnam Airlines’ plan to retain revenue of less than VND3.13 trillion (some US$148 million) it expects to earn from selling its shares starting from VND22,300 per shares at an initial public offering. Deputy Minister Nguyen Hong Truong has confirmed this.

Vietnam Airlines aims to sell 25% of its chartered capital to investors at the IPO this year. Later, the State holding at this corporation will be gradually reduced to 65%.

Truong said Vietnam Airlines will remain a national flag carrier after equitization and the State will still hold a majority stake. The corporation’s plan to keep the VND3.13 trillion after IPO is in line with the aircraft expansion scheme.

Currently, Vietnam Airlines is copping with increasing pressure from both domestic and international aviation markets. On the home market, the airline’s domestic market share has shrunk to under 60% and will go down further if more carriers join the country’s aviation market.

Vietnam Airlines expects to hold market share of 39.9% for international passengers and 49.9% for domestic guests by 2018.

Vietnam Airlines now operates more than 80 aircraft of different types, including Boeing B777, Airbus A330s and A321s and plans to expand its fleet to some 100 by 2015 and 140-150 by 2020.

Vietnam Airlines is one of the 44 state-owned enterprises under the Ministry of Transport to complete equitization.

SGT/VNN

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