Vietnam Airlines set for partial privatisation in November

Vietnam Airlines said it will be partially privatised in November, part of a long-delayed drive to sell off the country's mostly inefficient state-owned enterprises.

Around 25 per cent of the national carrier will be sold in an Initial Public Offering (IPO), the company said in a statement released late Thursday (Sep 11). "Based on the equitisation plan approved by the Prime Minister, Vietnam Airlines will quickly implement steps to proceed with the IPO in late November 2014," it said.

Equitisation is the term Vietnam uses to refer to privatisation. State media reported that 20 per cent of the shares will be sold to strategic investors, some 3 per cent to airline staff and the rest to the public. The state will retain a 75 per cent controlling stake in the company, whose registered capital is roughly VND 14 trillion (US$661 million), the statement added.

Vietnam first began modest State-Owned Enterprise (SOE) reforms in the 1980s and there has been talk of privatising Vietnam Airlines since at least the mid-1990s. Prior attempts to sell off portions of the airline have been scuppered primarily by resistance from vested interests and a lack of political will. At least one prior attempt was abandoned due to the global economic crisis in 2008.

The overall process of SOE reform is mired in delays, experts say, as Vietnam's leaders must balance reducing inefficiencies in the SOE sector - which still account for some 35 per cent of Gross Domestic Product - with a general reluctance to cede control of key companies to foreigners.

Vietnam Airlines, a SkyTeam alliance member, remains the largest airline in the country, employing more than 10,000 people. It now owns more than 80 aircraft and will receive another 15 by the end of next year. SkyTeam is one of three major airline groupings, alongside Star Alliance and Oneworld. Other SkyTeam members include Air France, KLM, Alitalia and Delta.

In recent years Vietnam's flag carrier has faced stiff competition from low-cost VietJet Air, the country's first private airline which launched in 2011. VietJet has already cornered around 25 per cent of the domestic market - taking customers from Vietnam Airlines and rival low-cost carrier Jetstar, according to state media.

SOURCE