Vietnam Airlines Seeks Approval for $866 Million Capital Raise

Vietnam Airlines (VN) has requested approval from the Vietnamese parliament to raise up to VND22 trillion (USD866 million) in charter capital as part of its ongoing restructuring efforts. The proposal, submitted for review to Vietnam’s National Assembly, outlines a share issuance plan designed to strengthen the airline’s financial position following the impacts of the COVID-19 pandemic.

The capital increase will occur in two stages. In the first stage, the State Capital Management Committee will purchase VND9 trillion (USD354 million) worth of shares on behalf of the government. In the second stage, private investors will be allowed to acquire up to VND13 trillion (USD512 million) in shares, with the aim of raising vital funds to pay off pandemic-related debts and enhance the airline’s financial resilience.

Currently, the Vietnamese government holds over 86% of Vietnam Airlines, with ANA Holdings, the parent company of All Nippon Airways, owning a 5.62% stake. This restructuring initiative is part of the airline’s broader strategy to recover from the financial challenges brought on by the pandemic.

The additional funds raised through the share issuance will be crucial for addressing the airline’s debts, which accumulated during the pandemic, and for positioning Vietnam Airlines for future growth. The airline has faced significant financial setbacks in recent years, reporting a net loss of VND5.81 trillion (USD229 million) in 2023. While this marks the airline’s fourth consecutive annual loss, it represents a significant improvement compared to the VND11.2 trillion (USD440 million) loss reported in 2022.

Vietnam Airlines currently operates a fleet of 97 aircraft, including a mix of Airbus A320, A321, and A350 models, as well as Boeing 787s. The airline serves 60 airports across 20 countries. In addition to its main fleet, Vietnam Airlines also utilizes five ATR72-500s, which are wet-leased from its subsidiary VASCO – Vietnam Air Services.

This move to increase capital comes at a time when the airline industry is recovering from the pandemic’s disruption, and Vietnam Airlines aims to strengthen its competitive position in both the domestic and international markets. The airline’s efforts to secure government backing and attract private investment are critical steps in its long-term recovery strategy.

Vietnam Airlines’ focus on improving its financial capacity through this capital increase will help it regain stability and continue its operations as the aviation market recovers. With a more robust financial base, the airline plans to better navigate the challenges ahead and work toward future profitability.

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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com