Australian carrier Qantas said that Vietnam Airlines will take a majority share in its Jetstar Pacific offshoot from the Vietnamese State Capital Investment Corporation.
Under the arrangement, the Vietnamese airline will hold 69.93 percent of the low-cost airline, with Qantas owning 30 percent.
"This partnership brings together the proven low cost model of Jetstar with the unique local knowledge and existing networks of national carrier Vietnam Airlines," Qantas chief Alan Joyce said on Wednesday.
"We are confident this partnership between a low cost carrier and a full service airline in Vietnam can replicate the success of our Qantas and Jetstar strategy in Australia, and follows our recent partnership with Japan Airlines to form Jetstar Japan."
Jetstar Pacific would receive a capital injection of Aus$25 million (US$26.6 million) for fleet renewal, with the five Boeing 737s used currently to be replaced with new Airbus A320s from the middle of 2012, Qantas added in a statement.
The airline hopes to have 15 A320s in its fleet within the next few years.
Qantas bought into Jetstar Pacific, then known as Pacific Airlines, in 2007 with the carrier operating almost 150 services a week to seven destinations within Vietnam.
It connects with Jetstar's international network through flights to Singapore.
Qantas owns 100 percent of Jetstar Airways in Australia and 49 percent of Jetstar Asia Airways in Singapore.