The two largest shareholders in Viet Nam-based low-cost carrier (LCC) Jetstar Pacific (Ho Chi Minh City) (JP) are in talks to restructure the business, according to a report in the Saigon Times. Any deal would make it the third such restructuring since the carrier was established 15 years ago. The last restructuring took place in 2012 when the airline stood on the verge of bankruptcy, before being pulled back from the brink of financial collapse after state intervention.
Qantas Group, which holds a 30% stake in the carrier via its Qantas Asia Investment Company of Singapore (QAICS) vehicle, is looking to offload its share in Jetstar Pacific to national carrier Vietnam Airlines (VN, Hanoi Noi Bai International), which already controls around 70% of the LCC's capital. The deal is expected to be completed after the COVID-19 pandemic has passed. QAICS acquired its stake in the carrier in 2007 from the State Capital Investment Corporation in Viet Nam.
At the time, Qantas viewed the stake as being an opportunity to develop an LCC in the Viet Nam domestic market which offered high growth prospects in comparison to the mature Australian domestic market. However, since 2007 JP has been beset with problems - the 2008 global economic crisis, the increasing cost of fuel plus a fleet of older aircraft, and the restrictions placed on the company. As a result, the airline has been a perennial loss-maker.
The two airlines are yet to conceive a final agreement, so discussions continue at this stage. Vietnam Airlines will require acceptance of the plan by the State Capital Management Committee. It is currently unknown whether Vietnam Airlines will remove or retain the JP brand, but it is likely to replace this name with a completely new one. The carrier's operating model after the restructuring is also still being discussed, including whether JP will continue to be a subsidiary of Vietnam Airlines.
When asked to comment by ch-aviation on the stake disposal talks, a Qantas Group spokesperson said: “We are in regular dialogue with our partner Vietnam Airlines about Jetstar Pacific, particularly given the challenges facing all carriers at present. However, we don’t comment on speculation and we have no material changes to announce.”
According to the ch-aviation capacities module for the week commencing July 20 the four airlines controlling the domestic market are led by Vietnam Airlines (42% share of weekly seats), followed by VietJetAir (37%), Bamboo Airways (QH, Hanoi Noi Bai International) (12%), and Jetstar Pacific (10%).
The LCC operates a fleet of 18 aircraft, consisting of fifteen A320-200s and three A321-200s, all of which are currently inactive, the ch-aviation fleets module shows.
