On November 25, 2024, Vietnamese lawmakers are discussing the possibility of allowing Vietnam Airlines to issue new shares to raise up to 22 trillion dong ($866 million) to existing shareholders. This financial maneuver is aimed at bolstering the national carrier's capital structure amidst ongoing recovery efforts from the economic impact of the COVID-19 pandemic. The proposed share issuance would help Vietnam Airlines, which is more than 86% owned by the government and 5.62% by Japan's ANA Holdings, to repay its debts and restore its financial health.
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According to the transport ministry's Giao Thong newspaper, this funding would be crucial for the airline to settle outstanding obligations stemming from the global health crisis. No specific timeline for the share sale was given in the reports, but the urgency of the matter reflects the airline's need to stabilize its finances. Vietnam Airlines has been under financial strain due to the drastic reduction in travel demand during the height of the global lockdowns. The airline reported significant losses over the last few years, with the need to restructure its debt becoming increasingly apparent. The additional capital would not only help in debt management but also potentially fund operational enhancements and fleet expansion as the aviation sector looks toward recovery.
The share issuance strategy is part of a broader context where state-owned enterprises in Vietnam are being encouraged to seek private sector investment to ease fiscal burdens on the government. This approach aligns with Vietnam's economic policies focusing on market liberalization and attracting foreign investment. However, the decision to issue shares also raises questions about the dilution of government control, depending on how much new equity is issued and taken up by existing or new investors. The move could also impact the airline's strategic direction, potentially allowing for more private-sector influence in its management and operations.
The proposal's discussion in the National Assembly underscores the government's active role in supporting key industries like aviation, which are pivotal for economic growth, tourism, and international connectivity. The outcome of these deliberations could set a precedent for how Vietnam manages the financial health of its state-owned enterprises in an increasingly competitive and globalized market environment.