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Vietnam Airlines plans IPO in 2013

HANOI, Viet Nam News/Asia News Network--The national flag carrier Vietnam Airlines is planning to make its initial public offering (IPO) by the end next year, under a restructuring plan submitted to the Ministry of Transport earlier this week.

Under the plan for partial equalization, about 70 to 80 percent of shares in the airline would continue to be held by the state.

Vietnam Airlines Chairman Pham Viet Thanh told the newspaper Dau Tu (Vietnam Investment Review) that his corporation expected to raise at least US$200 million from the IPO, a target that would be fulfilled only if some of the shares were acquired by foreign investors.

In 2015 and 2017, the airline expected to issue additional shares worth US$450 million to raise capital to buy nine Airbus A350 and four Boeing B787-9 aircraft for its fleet.

During the re-organisation, the airline would hold onto 100 percent of its Vietnam Airlines Engineering Ltd. and Vietnam Air Petrol Ltd. subsidiaries under a limited liability company model. The airline would also maintain its major shareholder status in nine service companies while keeping its existing investments in 11 suppliers.

It would otherwise divest from non-core business such as insurance, securities, banking, and real estate by 2015 with an expected capital, retrieving capital totaling an estimated 530 billion dong (US$25.3 million).

Under the final restructuring, Vietnam Airlines would consist of the parent company, 15 affiliates and 12 associated companies, compared to the current 18 and 14, respectively.

The carrier expects the restructuring to help improve its business performance during the 2012-20 period, with earnings to total US$43.5 billion and profits to reach US$1.08 billion during the next eight years. The airline would also targets to become the third largest airline in Southeast Asia by the end of the decade.

Vietnam Airlines had been included in a government list of state-owned enterprises to go public during 2007-10, but the plan failed to take off due to the financial crisis and the declining stock market.

At a meeting earlier this week, Minister of Transport Dinh La Thang said that the airline now needed to speed up its restructuring with the aim of becoming a stronger national carrier. The airline would complete the final draft of its restructuring plan for submission to the Ministry of Transport by the end of this month, with government approval expected in May, Thang added.

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