National carrier Vietnam Airlines has sought government approval to retain VND3.2 trillion (US$148 million) from its initial public offering (IPO) this September, to buy more aircrafts.
This amount represents 25 percent of the capital surplus, news website Saigon Times quoted Deputy Minister of Transport Nguyen Hong Truong as saying on July 9.
The remaining 75 percent will be absorbed by the state budget, Truong said.
Capital surplus is an excess over the face value (VND10,000 per share) received from selling shares at the IPO.
Vietnam Airlines plans to sell nearly 352 million shares, or 25 percent of its stake, at a price of VND22,300 ($1.05) per share at the IPO.
Vietnam Airlines needs nearly US$3.3 billion, mainly to buy aircraft, under its operation plan during 2014-2018 period. Photo credit: VnExpress
About 282 million shares (20 percent) will be sold to strategic partners. Another 48.8 million shares (3.5 percent) will be sold to the public while the remainder will be sold to the company's employees.
Truong said the permission for Vietnam Airlines to keep $148 million in capital surplus is necessary for the carrier to expand its fleet given the air travel market's fierce competition.
As of late last year, Vietnam Airlines accounted for 63 percent of the seats on domestic flights, compared to 25 percent for start-up VietJet Air and 12 percent for Jetstar Pacific, according to the CAPA-Center for Aviation, an aerospace consulting firm.
Truong said Vietnam Airlines needs nearly $3.3 billion, mainly to buy airplanes to realize its operation plan during the 2014-2018 period.
Last year private carrier VietJet Air agreed to buy $9 billion worth of planes from Airbus over the next decade and plans to list in two years, likely outside Vietnam.
After the IPO, the government will retain a controlling stake of 75 percent in Vietnam Airlines. The government could reduce its holdings to 65 percent in the future.
Vietnam plans to partially-privatize 432 out of 949 enterprises wholly-owned by the state by the end of next year.
But only a few - including Vietnam Airlines, mobile network operator MobiFone and garment firm Vinatex - are expected to catch the eyes of foreign investors.