SCIC to slash stake in Jetstar Pacific, invite other investors

Vietnam state investment arm State Capital Investment Corporation (SCIC) has received approval to cut its stake in loss-making budget airline Jetstar Pacific and allow other domestic businesses to invest in it.

Jetstar Pacific, the domestic low-cost airline partly owned by Qantas, has also been allowed to raise its chartered capital through a rights issue for its existing shareholders, said a statement posted on the government website Sunday.

SCIC, the airline’s biggest shareholder with a 75.78 percent share at present, will buy a part of its rights to bring its stake to 51 percent in the expanded capital portfolio, the government said in the statement, without disclosing more details. The remaining stake will be offered to domestic shareholders.

Australian flag carrier Qantas is the next biggest shareholder in Jetstar Pacific with an 18 percent stake, followed by Saigontourist Holding Company with 6.18 percent.

In a note sent to Prime Minister Nguyen Tan Dung in October, SCIC had said that the low-cost airline needed US$30-35 million next year to “stay stable and develop in upcoming years.” It had sought permission to allow Qantas to raise its stake in the carrier to 49 percent, above the current 30 percent foreign ownership cap on airlines.

But late last month it sent another note to the prime minister saying “raising the foreign investor’s stake to 49 percent is not appropriate at the moment.” SCIC proposed selling part of its stake to other domestic investors instead.

SCIC says Jetstar Pacific had made a loss of $22 million in the first 10 months of this year. The company blamed its poor performance on high fuel costs earlier this year and foreign exchange fluctuations.

In related news, Jestar Pacific will start offering flights from Hanoi to the southern city of Can Tho on January 3, 2009. The airline will also sell tickets at the promotional price of VND18,000 ($1.05), not including taxes and fees, available online on December 15, 2008 only.

Xuan Toan

thanhnien

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