Vietnam Pacific Air mulls registered cap increase
HANOI - Pacific Airlines, Vietnam's second carrier, is considering ways to raise its registered capital to boost operations, company director Luong Hoai Nam said Friday. The airline, which has a registered capital of VND40 billion, or $2.7 million, has accumulated net losses of VND215 billion after more than 10 years in operation, Nam told Dow Jones Newswires. This is the first time that Pacific Airlines has revealed its losses since it started operations in 1991.
Nam said the airline will also need to raise the number of its shareholders soon. "Because we only have a small amount of capital, we have many problems, and to overcome them our shareholders are discussing measures to improve operations, which will involve raising more funds, possibly some cash from private investors," he said. Pacific Airlines flies domestic and international routes. The airline has daily flights to Ho Chi Minh City, Danang, and five flights a week to Taipei and Kaohsiung in Taiwan. It has three aircraft - two Airbus A321s and one A320.
Pacific Airlines' seven shareholders, which are state-owned companies, comprise Vietnam Airlines (VAI.YY), Saigon Tourism Co., Vietnam Air Petro Co., Southern Airport Services Co., Vietnam Air Services Co., Air Import-Export Co. and Trading & Transport Investment Co. Vietnam Airlines is Pacific Airlines' largest shareholder, with a 51% stake. Nam, however, declined to comment on Pacific Airlines' privatization plans, saying that "it's too soon to say now."
According to a state media report Friday, Vietnam Airlines' director Nguyen Xuan Hien said his firm is willing to reduce its stake in Pacific Airlines to 20% or 30%. He said this would allow other investors to help Pacific Airlines to be profitable in the future. "The government has allowed Pacific Airlines to sell stakes to the public, and this (move) is in line with the government's equitization program," Hien told the Youth newspaper. Vietnam prefers to use the term "equitization" rather than privatization because the government keeps a major stake in all local companies.
Vietnam currently has three carriers. Vasco, the third airline, is also a state-owned firm that operates three small aircraft in the domestic sector.
By Nguyen Pham Muoi - Dow Jones Newswires - December 17, 2004.
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