May 1, 2014 2:17 am JST

VietJetAir eyes IPO abroad as early as 2015

MANABU ITO, Nikkei staff writer

HANOI -- VietJetAir, the leading low-cost private carrier of Vietnam, hopes to go public on an overseas stock exchange as early as next year, according to a top executive.

     The unlisted company has not yet decided where to have its initial public offering, but it prefers Hong Kong or Singapore, Managing Director Luu Duc Khanh told The Nikkei in a recent interview.

     "We have a short list of some advisers" for the IPO, Khanh said. "We have not yet decided."

     VietJetAir plans to begin flying long-distance international routes to the U.S. and Europe by around 2018, he said.

     As part of its strengthening of international flights, VietJetAir will start service between Ho Chi Minh City and Singapore in late May. By year-end, the airline will apply for approval for flights to Taiwan and Hong Kong as well as three cities in mainland China, including Shanghai, according to Khanh.

     He added that VietJetAir is also considering direct service to Osaka, and plans to seek approval during the October-December quarter. Last year, some 600,000 Japanese travelers visited Vietnam. Since no low-cost airlines currently fly directly between the two countries, demand among young travelers is strong, Khanh says.

     The company's Thai subsidiary is scheduled to launch its first flight as early as September, with this airline to offer not just domestic routes but also short-haul international service to such nations as China and Myanmar.

     Khanh contends that VietJetAir is cost competitive compared with its rivals. "AirAsia is based in Malaysia. Vietnam's labor cost is still lower," he said.

     Back in February, VietJetAir signed a $9.1 billion deal with Airbus for the purchase and lease of up to 100 A320 aircraft. Delivery of the jetliners will start in October, with nine or 10 aircraft to be delivered every year.

     VietJetAir intends to fund the purchase through the planned IPO and by borrowing from domestic and foreign financial institutions. It expects to receive some money from France's BNP Paribas and China Construction Bank, according to Khanh.

     Launched in December 2011, VietJetAir now flies about 20 domestic and international routes.