All Nippon Airways, the Japanese air carrier, is reportedly one of the more likely candidates to become the strategic partner of Vietnam Airlines, the national flag air carrier.
The Japanese carrier has been repeatedly mentioned in media as the possible partner of Vietnam Airlines, which is planning an IPO (initial public offering) in November.
At a press conference about the Prime Minister's approval of the IPO plan, All Nippon Airways was also mentioned by Vietnam Airlines' general director Pham Ngoc Minh.
As planned, after the Ministry of Transport approves the criteria for choosing strategic investors, the information will be released to potential investors in October. Then an investors' conference will be organized and negotiations will be conducted to choose strategic partners.
Though no final decision has been made yet, analysts believe it is highly possible that All Nippon Airlines will be chosen.
With the starting price of VND22,300 per share at the November IPO, the Japanese carrier would have to have $300 million to acquire 20 percent of Vietnam Airlines' shares.
The sum of money, according to analysts, is within the reach of the Japanese partner, which has announced a plan to expand its business in Asia with a budget of up to $1.6 billion.
According to CAPA, an institution that provides aviation knowledge about Asia Pacific region, the $1.6 billion was mobilized through a share issue campaign in 2012, which would be invested in several Asian airlines to help increase All Nippon Airlines' revenue in overseas markets.
The carrier last August spent $25 million to buy 49 percent of Myanmar Asian Wings Airways. The other possibility could be Philippines Airlines, a Southeast Asian carrier with a similar operation scale to Vietnam Airlines.
Regarding the Vietnamese market, All Nippon Airways has recently decided to use B787 Dreamliners instead of B767 for daily flights between Haneda, Tokyo and Noi Bai, Hanoi. This has helped increase the transport capacity by 15 percent per day.
Meanwhile, Vietnam Airlines has announced satisfactory business performance in the first half of the year with the pre tax profit of VND82.3 billion, much higher than the predicted minus (-) VND160 billion in the context of tensions in the East Sea.
However, some analysts warned that the government's policy on equitizing Vietnam Airlines step-by-step may hinder the carrier's plan to choose strategic partners.
“I am surprised by the fact that Vietnam Airlines plans to sell 20 percent of its shares only, a very modest proportion of shares which will not attract strategic shareholders,” said Le Dang Doanh, a renowned economist.
Kyohei Hosono, CEO of Dream Incubator, a Japanese fund, also commented that both All Nippon Airways and Japan Airlines would not be very keen to become Vietnam Airlines' partner if they can hold up to 20 percent of shares only.
He said investors would not consider becoming strategic shareholders of Vietnam Airlines unless they were allowed to acquire 50 percent of the carrier.
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