Vietnam’s Bamboo Airways only started flying last January but is already planning an IPO – not in the distant future but in 2020, chairman Trinh Van Quyet told various media this week. He did not specify on which exchange Bamboo would be listed.
From launch to IPO in less than two years would surely set an airline record. But lately, aspirations have faded into rapidly changing plans amid frenetic development. This casts doubt on Bamboo’s 2020 IPO as well as broader business positioning and whether constrained aviation has room for Bamboo to grow.
Bamboo hopes to raise a small US$100 million through the IPO, which could only buy about two narrow-body jets, but not a single 787 jumbo jet that Bamboo plans to acquire to fly to the United States. United. Bamboo is owned by FLC Group, a local conglomerate covering real estate and leisure travel. Its private ownership reflects the ambition and capacity of non-state enterprises as Vietnam’s economy privatizes.
As a full-service airline, Bamboo is a rare startup for Asian aviation. Over the past decade, most start-ups outside of mainland China have been low-cost carriers. Bamboo’s fleet comprises 10 aircraft and has received government approval to grow to 30 in 2023.
The aspiration is also visible at VietJet, the private LCC which quickly grew to around 70 aircraft. Aside from a subscale subsidiary in Thailand, VietJet has mostly remained disciplined to its business model. Bamboo has made some evolutions in its short history.
Quyet told the Financial Times in June that Bamboo would lease second-hand A380s to accelerate its growth, but Bamboo was quick to say it was just a study that had been rejected.
The industry expected Bamboo to take jumbo jets before Bamboo received its first 787 ordered from Boeing. This seemed confirmed when a used A330 rolled out of a European paint shop in Bamboo’s livery in preparation for delivery. Bamboo dismissed this as a media rumor without commenting that an aircraft was expensively painted in Bamboo’s livery.
The A330 saga was picked up by Bamboo announcing a new development: it would lease 787-9s from undisclosed companies and put them into service this year ahead of its own 787s fresh from the Boeing factory. So far, trade-ins of 787s, which are still relatively new, have been limited, and the leased aircraft would arrive only shortly before his own.
Bamboo’s narrowbody fleet presents a long-term concern. In a frantic quest for expansion, Bamboo has taken on a hodgepodge of used planes in addition to its own new planes. The mixed fleet has inefficiencies, and leases are often multi-year, meaning that as Bamboo matures, it will have to wait for contracts to end or pay penalties for early returns.
Industry watchers wondered how Vietnam’s growth could be welcomed. The country’s airports are congested, as are many international destinations. There are also questions about how the government views fast-growing private airlines taking market share from state-owned Vietnam Airlines, a full-service airline that also owns low-cost carrier Jetstar Pacific.
VietJet’s growth seemed quite difficult for the status quo before Bamboo entered. Other start-ups are on the way, with three airlines wishing to launch in Vietnam: Vinpearl, Vietravel and KiteAir.