Vietnam Airlines has sold its 49% share of Cambodia Angkor Air to an undisclosed buyer. The remaining 51% share of Cambodia’s Angkor Air is owned by the Cambodian government, who has said they do not want to nationalize the airline fully. Vietnam’s flag carrier has also signed a contract to sell five A321-200s valued at US$37 million as the impact of the virus outbreak affects their financial position.
Sale to an undisclosed buyer
In a 2019 audit of Vietnam Airlines, the airline cited severe operating costs as its reason for wanting to sell its shares in Angkor Air. The impact of travel restrictions on the aviation industry means that Vietnam Airlines’ will welcome the cash injection. CH-Aviation is reporting that the undisclosed buyer has paid $49 million for the shares, plus $37 million for the five aircraft.
Vietnam Airlines has been severely hit by current travel restrictions, with most of its 100-strong fleet grounded. The airline operates numerous flights to mainland China. In fact, it launched its 19th route to the country in December 2019. The airline struggled earlier this year as China introduced strict travel restrictions. Half of the airline’s staff have been furloughed. According to VNExpress, Vietnam Airlines would need $150 million in loans as well as $514 million in government aid to make it through the virus outbreak successfully.
As well as selling its stake in Cambodia Angkor Air, Vietnam Airlines is also selling five aircraft. The five Airbus A321-200’s have also been sold to an unknown buyer for $37 million. Previously, the airline announced it would also be leasing either its A321s, A350-900s and/or Boeing 787-9/10s. It is not known if the airline will still lease some aircraft or has simply decided just to sell them instead.
Cambodia Angkor Air
Cambodia’s Angkor Air was only formed in 2009 after the previous national airline went bankrupt after the 9/11 attacks. Now, the airline’s history is again being shaped by an international event, COVID-19.
The airline’s majority stakeholder is the country’s government and currently operates just ten domestic and foreign routes. A spokesperson for Cambodia’s State Secretariat of Civil Aviation (SSCA) said that the sale would not affect the airline’s operations. They also confirmed that the airline’s management and structure would not be changed.
There are also concerns regarding Angkor Air’s ability to survive the impact of the virus. However, with the sale of 49% of the airline to a private equity investor, the Cambodian government has confirmed that it will not nationalize the airline to help it survive.
Vietnam Airlines is restructuring its finances to deal with the impact of the virus, but it’s difficult to know if this will be enough. The airline is considering a fleet renewal as well as taking on a larger share of low-cost carrier JetStar Pacific. Currently, Vietnam Airlines is a majority shareholder at JetStar Pacific alongside the Qantas group.
Whatever the airline chooses to do regarding leasing aircraft, acquiring JetStar Pacific, or upgrading its fleet, Vietnam Airlines is undoubtedly one to keep your eye on in the coming months.
Let us know your thoughts about what the airline may be planning in the comments section.