Vietnam Airlines eyes stock market listing in 2019
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Vietnam Airlines plans to list its shares on the Ho Chi Minh City Stock Exchange next year amidst rising competition of low-cost carriers. “Vietnam Airlines will go public in the first quarter of next year,” its chief executive, Duong Tri Thanh said. “We are making our target the first quarter of next year, and I think it is feasible.”
But he admitted the final decision rests with the government.
The carrier’s shares are traded on Hanoi’s Unlisted Public Company Market (UPCoM) and it has a market capitalization of more than $2 billion.
The government currently owns around 86 percent of Vietnam Airlines, but has said it wants to reduce this to 51 percent by 2020.
The country’s largest airline by passengers carried now faces rising competition from budget carrier VietJet Aviation and others. Last month Vietjet became the second most valuable airline in Southeast Asia by market cap behind only Singapore Airlines.
With the domestic market showing signs of saturation, Vietnam Airlines seeks to expand overseas. In October it started a daily service from central Da Nang City to Osaka City to add to the 70 weekly flights from Vietnam to Japan. In 2020 it plans to begin a direct service to the U.S.
Vietjet launched a daily service from Hanoi to Osaka last month to take its total number of international routes to 64 in 11 countries. It plans to add two more routes to Japan by next month.
“The carrier’s shares are traded on Hanoi’s Unlisted Public Company Market (UPCoM) and it has a market capitalization of more than $2 billion.”
Other airlines are also jostling for market share. Bamboo Airways, Vietnam’s newest airline, received a license last month and is set to make its maiden flight on December 29.
Experts said the listing of Vietnam Airlines would allow it to compete with other carriers by attracting more investors.
“This would be a major Vietnamese company joining the stock exchange, which would interest international investors and potentially enable Vietnam Airlines to raise funds more easily to compete with the likes of VietJet and Bamboo,” the Financial Times quoted Tony Foster, a partner at Hanoi law firm Freshfields, as saying.
Vietnam’s international aviation market, driven by the rapid growth in tourism, has been expanding at more than 30 percent a year, according to the CAPA Centre for Aviation, an Australian consultancy.
Vietnam welcomed 14.1 million international tourists from January to November, up 21.3 percent year-on-year, according to the General Statistics Office. As many as 11.4 million of them came by plane, up 15.3 percent, it added.
Vietnamese carriers transported 45.1 million passengers between January and November, up 11.9 percent year-on-year, and 369.2 million tons of goods, up 18.6 percent, according to the General Statistics Office.
There are five carriers in Vietnam: Vietnam Airlines, Vietjet Air, Bamboo Airways, Jetstar Pacific and VASCO. Vietnam Airlines owns VASCO and has a 70 percent stake in Jetstar Pacific.
Questions & Answers
Q.What is the primary reason Vietnam Airlines is seeking to list its shares on the Ho Chi Minh City Stock Exchange?
What is the primary reason Vietnam Airlines is seeking to list its shares on the Ho Chi Minh City Stock Exchange?
The listing aims to allow Vietnam Airlines to attract more investors and raise funds more easily. This would help them compete with rival carriers such as VietJet and the newly licensed Bamboo Airways.
Q.What is the Vietnamese government's current stake in Vietnam Airlines, and what is its future intention?
What is the Vietnamese government's current stake in Vietnam Airlines, and what is its future intention?
The government currently owns around 86 percent of Vietnam Airlines. It plans to reduce this ownership to 51 percent by 2020, as previously stated.
Q.What other airlines are posing a significant competitive threat to Vietnam Airlines?
What other airlines are posing a significant competitive threat to Vietnam Airlines?
Vietnam Airlines faces rising competition from budget carrier VietJet Aviation, which became the second most valuable airline in Southeast Asia. Bamboo Airways, a new airline, also received its license last month.
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