Qantas to exit its low-cost aviation JV with Vietnam Airlines in a “giveaway deal”

Photo from Vietnam Airlines.

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.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.