HA NOI - The Government has approved a plan to comprehensively restructure the national flagship carrier, Vietnam Airlines by 2015.
Under the plan, the Government will reduce its stake in the airline from 70-80 per cent to 65-70 per cent after the company issues its IPO this year as expected. This represents a major shift from the initial draft submitted to the Ministry of Transport last April, in which the airline proposed a 70-80 per cent stake held by the State. Vietnam Airlines will continue to issue shares to mobilise capital.
According to the Ministry of Transport, the change aimed to bring the airline in line with the country's State-owned enterprises, as other businesses in the transport sector are undergoing similar restructuring.
Minister of Transport Dinh La Thang said that the outlook was good for implementing the plan and any appraisal problems had already been handled.
According to Dau Tu newspaper, Vietnam Airlines has officially submitted a contract to choose international financial consulting companies to the Ministry of Transport for approval.
Apart from the mother corporation, which includes 9 member companies, the restructured Vietnam Airlines will consist of 26 independently audited companies.
The mother corporation will hold a 100 per cent stake in Vietnam Airlines Engineering Company (VAECO) only, while owning half of the registered capital of 14 companies and less than 50 per cent of registered capital in the 11 remaining companies.
After finishing the restructuring plan, Vietnam Airlines will comprise four airlines: the mother corporation, Vietnam Air Services Co (VASCO), Jetstar Pacific (a low-cost airline) and Cambodia Angkor Air.
By late 2015, Vietnam Airlines is expected to completely divest its capital from non-core businesses with a view to improving its business performance. Revenue from air transport will reach $43.8 billion in the next 8 years with a pre-tax profit of more than $1 billion. By 2015, the national flag carrier will rank third in the region.
The local economy was showing no signs of rebounding at least in the first half of this year, said Pham Viet Thanh, chairman of Vietnam Airlines. He said the local aviation market could still grow between 4-5 per cent this year, mainly because several budget airlines were offering promotions to lure clients away from alternative forms of transportation.
Vietnam Airlines' total annual revenue reached VND50.891 trillion (US$2.4 billion) in 2012, surging 6.3 per cent. The airline also saw profits of VND69.8 billion ($3.3 million), up 239 per cent year on year.
By mid-December, the national flagship carrier controlled 69.7 per cent of the domestic market, a yearly decrease of 4.47 per cent. — VNS