VietJet Aviation Joint Stock Co., the Vietnamese carrier known for its bikini-clad flight attendants, may hold its initial public offering as early as the second quarter as it plans to build global routes and become a top budget airline in Asia.
The IPO’s exact timing will depend on market developments domestically and globally, Nguyen Thi Phuong Thao, chief executive officer of Vietnam’s only privately-owned airline, said in an interview on Friday. The company hasn’t finalized how much it wants to raise and could offer as much as a 30 percent stake, the regulatory limit for foreign holdings, she said.
“We plan to make VietJet a global airline," Thao said from her Hanoi office. "We look at Emirates, which came from a country with a small population and has become a global airline. We want to make VietJet the Emirates of Asia."
The Dubai-based carrier is the world’s biggest long-haul airline with flights to about 150 destinations, and said last month it plans to add 37 new planes -- worth $14.5 billion at list prices.
VietJet, which featured dancing flight attendants clad in bikinis on an inaugural route and bikini models on its airplanes for a desktop calendar, carried 9.3 million passengers in 2015, an increase of 66 percent from 2014. Revenue soared 205 percent last year to 10.9 trillion dong ($488 million) while net income rose to almost 1 trillion dong, according to the company. The airline expects revenue to double this year and passenger capacity to reach 15 million this year.
VietJet will probably surpass national carrier Vietnam Airlines as the nation’s biggest domestic carrier this year, according to CAPA Centre for Aviation. Vietnam is expected to rank among the world’s 10 fastest-growing aviation markets in the next two decades, according to the International Air Transport Association.
“It’s an ideal market for low-cost carriers,” or LCCs, said Brendan Sobie, Singapore-based chief analyst at CAPA Centre for Aviation. “This makes VietJet an attractive scenario for investors. They don’t have the risks other LCCs have in terms of over-capacity and competition.”
The low-cost carrier is seeking to expand in a market that’s grown 20 percent annually in the last three years, according to the airline. VietJet earlier this month signed a $3.04 billion deal to buy Pratt & Whitney engines to outfit 63 Airbus A320neo and A321neo airplanes it contracted last year. The company plans to add a dozen planes annually to its fleet of 42 planes at year-end, Thao said. It wants to have a fleet of 100 by 2020.
It also plans to expand international routes to cities in South Korea, Malaysia, China and Japan this year, Thao said.
Moving beyond VietJet’s core low-cost business to long-range international routes will require a lot of investment in larger aircraft and developing an international brand, Sobie said. “It’s a riskier and harder market to get into.” In Vietnam, he added, the carrier has “first-mover advantage.”
The IPO is also being planned as Bloomberg Asia Pacific Airlines Index slumped 14 percent this year, reversing a 19 percent gain in 2015. Vietnam’s VN-Index, Southeast Asia’s best performer last year, has fallen 2.2 percent since the start of 2016.
Still, the stock sale is being planned as frontier-market equity funds from Sweden to Hong Kong are ready to buy more Vietnamese stocks, attracted by cheap valuations and the fastest economic growth in almost a decade. Coeli Asset Management and Asia Frontier Capital say they plan to add to their equity holdings this year as record-high foreign direct investments and the nation’s free-trade agreements help boost economic growth.
VietJet, founded in 2007 by Thao, competes with national carrier Vietnam Airlines, which owns 70 percent of budget carrier Jetstar Pacific Airlines Aviation JSC , with Qantas Airways Ltd. holding the remaining 30 percent. Vietnam Airlines also owns Vietnam Air Services Co., known as Vasco, which it plans to split off as a commuter service.
"We are ready to go to the next level," said Thao. "We’re ready to take the opportunities that the country’s international integration will bring."