Vietnamese banks pleased about syndicated loans to airlines
Vietnamese banks pleased about syndicated loans to airlines
Domestic commercial banks have shown greater interest in funding airlines’ aircraft purchase deals as they can see attractive business opportunities as airline partners.
Despite the economic downturn, the Vietnamese aviation market has been growing steadily over the last few years. A report showed that 38 million passengers were served in the first nine months of 2014, up by 15 percent over the same period last year, while 280,000 commercial flights took place, up by 13 percent.
The stable annual two-digit growth rate has prompted airlines to expand their fleets to satisfy the increasingly high demand. In 2007-2009 alone, the national flag air carrier Vietnam Airlines ordered 26 A321-231s with Airbus. Meanwhile, the private airline Vietjet signed a contract to buy and charter 100 aircraft last year.
Many aircraft purchase deals were made with funding from big foreign companies like GECAS, the finance company belonging to the US-based GE Group, French BNP Paribas, Jackson Square of Japanese Mitsubishi UFJ and the US Ex-Im Bank.
However, funding airlines’ commercial contracts is no more a playing field solely designed for foreign banks. Vietnamese bankers have recently decided to jump on the bandwagon as they see this is a profitable field.
Vietcombank, one of the largest Vietnamese banks, last week signed a contract for a loan worth $160 million to Vietnam Airlines which would be paid in advance for the air carrier’s deal to purchase 18 Boeing 747s and Airbus A350s.
Three months before, SeaBank wrapped up the deal on funding Vietnam Airlines’ purchase of Airbus A321. Meanwhile, TP Bank was a member of the lending party in the syndicated loan provided to Vietjet which paid a deposit for two Airbus A320s.
Vietnamese commercial banks not only see airlines as good borrowers, but also as potential partners.
Vietcombank and Techcombank became the two big shareholders of Vietnam Airlines when they bought 98 percent of the carrier’s shares at the IPO held days ago.
In deciding to become the shareholder of airlines, banks expect high profits from the dividends they may receive from the airlines’ profitable business, and services they provide and the airlines’ cash flow management.
It is expected that Vietnam Airlines earns VND50 trillion a year from transportation services. Besides, the air carrier’s amount of cash from the sale of air tickets to 1.2 million passengers a month, and the salaries for 10,000 workers, are also very attractive to bankers.
Vietjet Air last November put an Airbus 320 into use for international flights with the logo of Vietcombank, which arranged the capital for the purchase of the aircraft.
