Vietnamese airlines race to find new investors

Vietnam Airlines, which owns approximately 98% of Pacific Airlines’ shares, has been searching for new investors for its subsidiary carrier since last year.

The national flag carrier is also looking to sell its stake in jet fuel distributor Skypec to help alleviate some of its difficulties and gradually reduce its losses.

By the end of last year, Vietnam Airlines was recording an accumulated loss of nearly VND34.2 trillion ($1.45 billion), and its shares are at risk of being delisted as the carrier is set to record three annual losses in a row.

Bamboo Airways is also searching for new investors to help its ambitious development plans.

Although the airline was expected to be invested in by a large southern property company, VnExpress has learned that the deal has yet to be finalized and the airline is still looking for new investors.

Rookie Vietravel Airlines is also seeking investors and has submitted a request to the government to increase its charter capital sixfold to more than VND7.6 trillion, mainly to expand its fleet.

By 2030 the airline seeks to have VND8.25 trillion in charter capital, in which shareholders contribute VND2 trillion and with the remainder coming from undistributed profits and other investors.

Nguyen Quoc Ky, chairman of Vietravel Airlines, said “the airline is lucky as it has attracted interest from some investors.” He added that the airlines prioritizes domestic investors who can journey with the airline for a long time.

Each airline has its own strengths to entice investors.

Pacific Airlines and Vietnam Airlines possess prime flight slots at major airports like Noi Bai and Tan Son Nhat.

Bamboo Airways is the fastest growing airline with a fleet of 30 jets just four years after it was launched. It also has a network covering both domestic and international markets.

Vietravel Airlines is part of tourism firm Vietravel’s ecosystem and therefore has a large customer base and a connection with tourism markets.

Nguyen Hai Quang, a lecturer at the University of Economics and Law under Vietnam National University, Ho Chi Minh City, acknowledged that the pandemic has severely impacted the airline industry and that finding new investors is essential.

“The aviation business requires large capital and aircraft-related expenses,” he said, adding that this is a good time for investors to join the industry.

The International Air Transport Association (IATA) has forecast that the global aviation industry will become profitable again this year with a profit to sales ratio of 0.4%.

But Quang also said that challenges lie ahead for Vietnamese airlines, and one of these is the recovery of the international markets.

“Only when international markets resume pre-pandemic levels can Vietnamese carriers report profits again,” he said.

Other factors such as fuel price, currency exchange rates, global economic growth and inflation will also play important roles in the performance of airlines, Quang said.

When new investors are found, airlines will have many opportunities for growth, he added.