Vietnam Airlines faces legal headache in sale of ailing Pacific Airlines

The flag carrier is looking for potential investors to acquire a stake in Pacific Airlines while trying to evaluate its value, and whether a private placement offer or public auction is suitable for the deal, Vietnam Airlines head accountant Tran Thanh Hien told shareholders at the annual general meeting Tuesday.

There are several different decrees on state capital management that should be consulted for each of the two options, which Vietnam Airlines are studying in great depth, he said.

Another challenge involves Pacific Airlines having accumulated a loss, with extra rules governing the sale of such companies, he added.

Hien said Vietnam Airlines is requesting the government to help it find a suitable investor in Pacific Airlines in a way that ensures transparency in legal implementation.

The state-owned carrier said in a recent report that Pacific Airlines is in a “severe” financial situation and is facing insolvency.

The low-cost carrier is reporting an accumulated loss of over VND4.4 trillion.

Vietnam Airlines said it is set to face risks if it cannot find a suitable buyer for the subsidiary in due time.

The flag carrier had recently sold its 35 percent stake in Cambodia Angkor Air and plans to divest the remaining 14 percent by the end of this year.

Pacific Airlines was established in 1991 and was known in a period as Jetstar Pacific. It was meant to be an arm of Vietnam Airlines to help it claim a great market share in the low-cost segment.

However, the carrier has been struggling to take off. In the last 10 years, it reported profit in only four years, the highest being just over VND100 billion.