Vietnam Airlines to sell shares to foreigners, hire consultant

Jan 15, 2008, 8:13 GMT

   Hanoi - State-owned Vietnam Airlines plans to partially privatize and sell up to 20 per cent of shares to foreign investors this year, the new general director said Tuesday.

   The government has also granted permission for the national flag carrier to hire a foreign consultant to advise on the plan, according to General Director Pham Ngoc Minh.

  'We are trying to become equitized within this year,' Minh told Deutsche Presse-Agentur dpa by telephone.

   'The existing capital will remain in the hands of the state and we will raise more capital by issuing shares. Foreign strategic partners may hold between 10 and 20 per cent of the total capital,' he said.

   It was unclear how many shares might be available to private Vietnamese investors.

    Vietnam has vowed to step up the 'equitization' - selling shares of state-owned companies - which dominated the economy before economic reforms.

    The process is not strictly privatization because in many cases - as apparently with Vietnam Airlines - the state reserves the right to buy a controlling stake in the shares.

   In 2001, Vietnam had some 6,000 state-owned enterprises, but selling of shares had dwindle that number to 1,400, local newspaper Tien Phong reported this month.

   Vietnam Airlines posted total revenues of 1.27 billion dollars in 2007, up 15.5 per cent against the previous year. Pre-tax profits reached only 23 million dollars, though that figure was up 6.4 per cent.

   According to its development strategy to 2020, Vietnam Airlines will need additional capital of 15 billion dollars to purchase new planes and build and upgrade its infrastructure.

   Earlier this year, the company signed contracts to purchase 10 Boeing 787 Dreamliners, 10 Airbus A350-900 and five ATR 72-500 planes.

   The national carrier will soon be facing new competition from the country's first private airline, VietJetAir, which plans to begin its commercial flights late next year.