Vietnam Airlines will become a major national group after restructuring
Minister of Transport Dinh La Thang requested that Vietnam Airlines submit a restructuring plan to the ministry in April before seeking Government for approval in May.
According to Thang, due attention must be paid to the privatisation of the holding company, Vietnam Airlines, with the Government retaining between 70% and 80% of stake in the company following restructuring.
The corporation was told to conduct an initial public offering (IPO) by the end of 2013.
As a result, the carrier will make plans to increase its charter capital by issuing new shares for investors.
Chairman of Vietnam Airlines’ Council of Members Pham Viet Thanh said the corporation is expected to take a minimum of USD200 million from the IPO. If this happens, it will then sell a part of its shares to international investors.
Apart from the privatisation, Vietnam Airlines also plans to use half of its annual profits to increase its equity to VND14.416 trillion (USD690.75 million) in 2013 and VND 21.373 trillion (USD1.02 billion) in 2015.
In 2015 and 2017, the corporation will issue an additional USD450 million worth of shares in order to mobilise sufficient capital for projects to buy 13 more A350 and B787-9 aircraft in 2016 and 2018.
Concerning the restructuring of its investment portfolio, Vietnam Airlines expects to maintain its entire investment in the Vietnam Airlines Engineering Company (VAECO) and Vietnam Air Petrol Company (VINAPCO).
It also wants to maintain its domination in nine aviation service companies as well as retain its current stakes in 11 companies which are traditional service providers.
Vietnam Airlines plans to withdraw investment from inefficient non-core businesses such as securities, insurance, banking and real estate. By 2015, it will withdraw capital from nine companies with expected proceeds of VND530 billion (USD25.39 million).
After the restructuring, Vietnam Airlines will become a national economic group that comprises a holding company along with 15 subsidiaries and 12 joint ventures, compared to the current 18 subsidiaries and 14 joint ventures.
The restructuring is expected to heighten Vietnam Airlines’ operational efficiency for the 2012-2020 period. It is expected to make profits of USD630 million on revenues of USD43.5 billion from aviation transportation in the next eight years.
Vietnam Airlines targets to become the third largest carrier in Southeast Asia by 2015.
After several state-owned corporations and groups incurred huge losses from non-core businesses, the Government is encouraging enterprises to speed up restructuring and focus on their core businesses in order to improve their operational efficiency.
The green-light to Vietnam Airlines to develop into a national group from a current corporation was made after considering its business efficiency. As a national flag carrier with competitive advantages in the region, the company has continuously made profits during its operations.