Vietnam Airlines plans to establish cargo unit to boost revenue

0

Vietnam Airlines CEO Duong Tri Thanh said his company is considering setting up a dedicated cargo unit.

Vietnam Airlines Corp., which has transformed its fleet with new wide-body aircraft and expanding services, is looking to further boost its growth by starting a dedicated cargo unit.

The Southeast Asian nation has emerged as a major manufacturing hub, with companies such as Samsung Electronics Co. churning out billions of dollars worth of devices each year, providing an air cargo opportunity for the national carrier, said Thanh to Juliette Saly in an interview with Bloomberg Television.

RELATED: Boeing plans to turn used 777s into cargo planes

Investments from companies such as Samsung, LG Electronics Inc. and Nestlé SA have made the country a manufacturing powerhouse, fueling some of the fastest economic growth in the region. Gross domestic product grew by 7.4% in the first quarter and the government expects growth of up to 7.5% this year. The government is also looking to attract more visitors and develop tourism as a key industry.

“We expect more international passengers, especially from Japan and Korea, and more middle-class passengers domestically, thanks to Vietnam’s rapid economic growth,” Thanh said.

The carrier is seeking to dominate the country which the International Air Transport Association predicts will be among the world’s five fastest growing air travel markets over the next 20 years. Competing with the country’s largest private carrier, VietJet Aviation Joint Stock Co., the state-owned airline is also focusing on attracting premium inbound passengers as faster economic growth leads to increased revenue. .

Strengthening growth

The national carrier – which sold an 8.8% stake to ANA Holdings Inc. in 2016 – expects to serve 23.4 million passengers this year, up from 22 million in 2017.

In 2016, Vietnam Airlines signed an agreement with Airbus SE to purchase 10 A350 widebody aircraft at a list price of $3.1 billion. It also earlier ordered 19 Boeing Co. 787-9 Dreamliners. It plans to have 110 planes by 2020 and 150 by 2030, up from 92 planes currently.

The airline plans a route to Los Angeles by late 2019 or early 2020. Last year it formed a venture with Air France to add 17 destinations in Europe to the original three.

The state-owned airline, currently listed on the Hanoi Unlisted Public Company Market – the so-called over-the-counter regulated market – plans to list shares on the country’s benchmark stock exchange in Ho Chi Minh City no later than late in the third quarter, Thanh mentioned. The government has pledged to reduce its stake to 51% by 2019-20, from around 86% currently.

The carrier expects pre-tax profit of 2 trillion dong ($87.8 million) this year, up from about 1.85 trillion dong in 2017, Thanh said. Vietnam Airlines’ unconsolidated pre-tax profit jumped 30 percent in the first quarter to 875 billion dong, with a 25 percent growth in its number of international passengers, according to Thanh.

Vietnam Airlines and ST Aerospace Supplies last week signed an agreement in Singapore to form a joint venture to provide aircraft component maintenance, repair and overhaul services in Vietnam. The deal will help the airline speed up the maintenance of its planes and create an opportunity to service other airlines in the region, Thanh said.

With help from Adrian Wong

Share.

Comments are closed.