Australian airline Qantas is expected to finalise an exit from Pacific Airlines, its joint venture with Vietnam Airlines, in a “giveaway deal” by the end of this month, according to Vietnamese media reports. Qantas holds a 30 per cent stake in the JV.
The reports quoted Vietnam Airlines’ spokeperson Dang Anh Tuan as saying that the shares will be transferred to the country’s flag carrier as a bestow from Qantas. “Vietnam Airlines has reported to relevant authorities and is working on some procedures to prepare for an expected official announcement by the end of October,” the spokesperson reportedly added.
Emails sent to Qantas and Vietnam Airlines by DealStreetAsia had not elicited any response at the time of publishing this article.
Pacific Airlines posted a loss of 1.1 trillion dong ($47.4 million) in the first eight months of 2020 due to the impact of COVID-19, the budget carrier’s deputy CEO Nguyen Dang Cuong had reportedly said. By the end of this year, Pacific Airlines’ loss is estimated to be 1.6 trillion dong.
Qantas announced its plan to exit Pacific Airlines in June this year, after 13 years of being an investor in what was Vietnam’s first low-cost airline. Qantas first acquired an 18 per cent stake in Pacific Airlines for $30 million in 2007 and subsequently increased it to the current 30 per cent in 2010.
Vietnam Airlines changed the airline’s original brand name from Jetstar Pacific to Pacific Airlines in June this year.
“With a highly competitive domestic market in Vietnam and the disruption caused by the coronavirus, the time is right to take advantage of the strength and scale of Vietnam Airlines in its home market,” Qantas Group’s executive and Jetstar Group’s CEO, Gareth Evans, said in the June announcement. Jetstar is the budget aviation business of Qantas.
“Low-cost carriers will play a certain role in supporting the return of travel as restrictions ease,” Vietnam Airlines’ executive vice president and Pacific Airlines’ chairman Trinh Hong Quang added in the announcement.
Vietnam Airlines Group, which is 86 per cent owned by the Vietnam government, also saw a consolidated loss of 10.75 trillion dong in the first three quarters of 2020, compared with a 3.3 trillion profit in the same period last year.
The group claimed a 51.7 per cent market share in the local aviation industry. In the low-cost segment, its competitors include Vietjet and Bamboo Airways.