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Vietnam ministry to sell stake in
Pacific Airlines
HANOI -
Vietnam's Ministry of Finance (MoF) plans to sell
86% of its shares in Pacific Airlines (PA) in the
near future in hopes of reviving the failing
joint-stock airline.
The hope, said Le Thi
Bang Tam, vice minister of the MoF, is that
foreign investors might buy a part of the the
airline's shares.
Pacific Airlines began
flights in 1991 with a starting capital of VND39
billion ($2.47 million). Over the last three
years, however, the carrier has lost VND215
billion (US$13.5 million).
"During
2001-03, the events of September 11, the Iraq war,
SARS [severe acute respiratory syndrome], avian
flu and oil price increases all contributed to PA
losing VND100 billion ($6.4 million)," Luong The
Phuc, head of the airline's management board,
said.
But outside factors are not wholly
to blame. Bad business decisions also contributed
to the losses. Despite a limited capital, Pacific
Airlines' management made a disastrous business
decision to open two new international routes (Ho
Chi Minh City-Da Nang-Hong Kong and Ho Chi Minh
City-Singapore-Ho Chi Minh City) which lost the
company a further VND100 billion.
At
present, the MoF is setting up a steering
committee to solve financial losses at Pacific
Airlines, the country's second-largest carrier
after Vietnam Airlines.
Reforming the
airline will be carried out in two steps. First,
an auditor will be hired to define the airline's
debt. Second, the MoF will work with lenders to
get it on a stable financial footing.
"It
will help the airline return to do business," Tam
added.
"Vietnam Airlines, which holds 80%
of Pacific Airlines, will transfer all its shares
to the MoF when the plan to reform Pacific
Airlines finishes," Nguyen Xuan Hien, director of
Vietnam Airlines said.
"Capital
mobilization is not a real problem for Pacific
Airlines. After renovation and selling shares, I
believe that capital can increase to 10 to 20
times what it is now," Luong Hoai Nam, director of
Pacific Airlines said.
However, the two
most important things for the airline: value of
trade-mark and market-share with Vietnam Airlines,
haven't been mentioned yet.
(Asia
Pulse/VNA) |
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