Monday, November 19, 2007

Vietnam's aircraft leasing takes off

Aircraft leasing company takes off


Representatives from Vietnam Airlines, VALC and Boeing ink purchase aggrements yesterday night for the sale of B787-8 Dreamliner passenger aircrafts. — VNS Photo Truong Vi

HA NOI — The Vietnam Aircraft Leasing JSC (VALC) officially started work yesterday with purchase agreement worth US$1.42 billion with Boeing to buy up to eight B787-8 Dreamliners passenger aircraft.

This is the most advanced aircraft in Boeing’s flock. Under the contract, VALC will receive the first aircraft by 2016.

The Ha Noi based aircraft leasing company is the first one of its kind in Viet Nam, which is seen as a major move in liberalising the airline industry.

Vietnam Airlines has already signed a contract to hire all of VALC’s eight aircraft once they are available. VALC’s first major client will be Vietnam Airlines but VALC said it also plans to target other companies in the region.

VALC has VND640 billion ($40 million) in charter capital. Under the proposed development plan, the company will raise its charter capital to at least $200 million in its first phase from 2007-2014, and to $1 billion by 2025.

The company’s founding shareholders include major State enterprises: Vietnam Airlines holds 23 per cent, the Bank for Investment and Development of Viet Nam (BIDV) 20 per cent, the Viet Nam Oil and Gas Group (PetroVietnam) 17 per cent and the Viet Nam Shipbuilding Industry Group (Vinashin) 11 per cent. Phong Phu Corp, a leading textile producer, contributes 8 per cent.

The remaining stock in the company will go to other shareholders.

VALC will deal in various aircraft, from helicopters to cargo planes, which will be leased on both long and short term basis. The company will also provide other aviation services.

Commenting on whether Vietnam Airlines would be offered preferential prices, BIDV Deputy General Director Le Dao Nguyen who is also vice chairman of VALC said: "Regardless of the fact that Vietnam Airlines is the biggest shareholder and at the same time VALC’s biggest client, the prices offered to Vietnam Airlines must be based on the common prices on the global market."

VALC also plans to increase charter capital with the participation of foreign investors, however, in the short term, this plan will be put on hold.

"We also expect that once the company makes a profit, VALC will join the stock market and raise other long term investments. Personally, I think [the plan] is not too ambitious," said Nguyen.

The leasing company will help meet growing domestic demand for aircraft, especially among private civil aviation companies such as SaiGon Air Corp.

"We will surely help in-house aviation companies as there seems to be real potential for this in the market," Pham Ngoc Minh, chairman of VALC said. "Vietnam Airlines currently has 46 aircraft, which is a really small number compared to the demand."

Following the signing of a Memorandum of Understanding with the Boeing Group during PM Nguyen Tan Dung’s visit to the US in September, Vietnam Airlines signed a contract yesterday to purchase another four Boeing B787-8 Dreamliners. Financial term of the contract were not disclosed.

Vietnam Airlines will receive the first B787-8 Dreamliners by 2009, said chairman of Boeing, Scott Edward Carson said.

The contracts with Boeing presented for a very bright future for Vietnam Airlines and marked a milestone for the strong development of Viet Nam’s aviation industry, he added. Vietnam Airlines would soon become a leading airline across the world.

Under a 2006 projection, Vietnam Airlines will need 86 aircraft by 2015 which will rise to 110 by 2020. However, Minh said this figure could be adjusted up 30 per cent due to its good performance. — VNS