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Vietjet to sell up to 15% stake as Vietnam battles COVID surge

Cargo shipping made budget carrier one of few profitable airlines in 2020

HO CHI MINH CITY -- Vietjet has received shareholder approval to sell a stake of up to 15%, the Vietnamese budget airline said on Tuesday, adding it will also consider a $300 million international bond sale.

While cargo shipping made Vietjet one of the few profitable carriers in 2020, it said shareholders at the annual meeting approved "a more cautious business plan for 2021" due to the impact of the coronavirus pandemic.

An "exponential increase in cargo revenue" this year will help the company's revenues reach $945 million, up 20% from last year, said Vietjet, which reorganized its fleet to carry more products instead of people after COVID broke out. Vietnam's exports have boomed as foreign shoppers stocked up on work-from-home goods.

But with one of the world's strictest border measures, Vietnam has very little cross-border travel for airlines to serve. Vietjet originally planned to ferry customers internationally by July 2021.

"However, taking into account the development of the COVID-19 pandemic afterwards, the airline's shareholders have passed a resolution to resettle a more cautious business plan for 2021," the company said.

The Southeast Asian country is fighting its deadliest surge of the virus yet, driven by a more contagious variant and outbreaks in densely-populated areas, while its vaccination rate remains low. That has decimated domestic travel, which was mostly steady before April.

Viejet said it could issue the bonds in 2021 or 2022 to "guarantee sufficient resources for a safe and efficient comeback." It said it would issue shares through a private placement.

Lim Shiu Beng, deputy general director of brokerage firm SBBS, expects the airline to use the financing to tide it over until the pandemic ends.

"The aviation sector all over the world is doing the same," he told Nikkei Asia. "Companies need to raise cash."

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