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Vietnam Airlines plans to hold IPO in September

Publication Date : 04-04-2014


State-owned flag carrier Vietnam Airlines plans to launch its initial public offering (IPO) in September, Deputy Minister of Transport Nguyen Hong Truong said during the ministry's first quarter meeting.

The IPO, which was initially scheduled to take place by the end of the second quarter, is being viewed as urgent, since industry competition is intensifying and private carriers are vying for Vietnam Airlines' passengers.

Vietnam Airlines has valued itself on the basis of two methods which were submitted to the Ministry of Transport and now awaiting the approval of Prime Minister Nguyen Tan Dung.

The first involves the use of its book value as the basis. Vietnam Airlines' was valued at 57.156 trillion dong (US$2.78 billion), of which the state's capital accounted for 10.567 trillion dong (US$507 million), as of 31 March, 2013.

The other was based on international standards. Foreign financial advisers have estimated that Vietnam Airlines' value at 57.047 trillion dong ($2.7 billion), of which the state capital accounted for 23.493 trillion dong ($1.128 billion), as of 31 March, 2013.

Vietnam Airlines' IPO will be the first aviation equitisation in the Southeast Asian country, making the value determination process more challenging.

In the monthly government meeting held earlier this week, Minister of Transport Dinh La Thang requested the Prime Minister to hasten the process of ratifying Vietnam Airlines' proposal, so that the carrier can finalise its detailed IPO plan.

The carrier plans that after launching its IPO, the state will hold a controlling stake of 70-80 per cent, also pending the Prime Minister's approval.

Vietnam Airlines, an official member of SkyTeam Alliance since June 10, 2010, is the only one left among the six regional main flag carriers that is not publicly listed. In Vietnam, IPO and listing are separate processes.

Vietnam Airlines earned a pre-tax profit of 533 billion dong ($25.3 million) in 2013, 34 per cent more than the year's set target. The carrier earned a total revenue of 72.6 trillion dong ($3.4 billion), up 8.5 per cent compared to the year's target. The airline carried 15 million passengers, with a record occupancy ratio of 79.5 per cent.




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