Bamboo Airways sees US$2.7b market cap at listing

Bamboo Airways sees US$2.7b market cap at listing
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(March 19): Vietnam’s Bamboo Airways expects a market capitalization of about $2.7 billion at its planned listing no later than the third quarter as it anticipates a June or July easing of the government’s pandemic halt of international flights.

The carrier, which began operations in 2019, plans to list 105 million shares on either the Ho Chi Minh City Stock Exchange or Hanoi Stock Exchange, Chairman Trinh Van Quyet said in an interview. Bamboo Airways expects to set the initial price for its trading debut at 60,000 dong ($2.6) per share, he added.

This marks the second attempt by the carrier to list its shares after scrapping the plan last year because of the novel coronavirus outbreak. The benchmark VN Index of Vietnamese stocks has rallied 8.8% this year to a near three-year high as the nation so far has mostly contained the domestic spread and started vaccinations this month.

“The market condition is very favorable” for the share listing, Quyet said.

Quyet anticipates the government will “cautiously” begin lifting its ban on most commercial international flights during the summer. He plans to start Bamboo Airways flights to the U.S. in the fourth quarter, he said. The carrier last year received permission from the U.S. Department of Transportation to operate direct flights between the U.S. and Vietnam, he said.

The government halted most commercial overseas flights for a second time after some employees of National carrier Vietnam Airlines JSC violated quarantine rules in December, leading to the nation’s first local coronavirus cases in almost three months.

Analysts are skeptical of a successful Bamboo Airways listing while the pandemic continues. “Listing would be tricky,” said Nguyen Anh Duc, head of institutional sales at SSI Securities Corp. Investors view the short-term prospects of airlines during the epidemic as “vague,” he said.

Quyet anticipates global vaccines will create a “boom” in the aviation industry later this year. He plans to expand Bamboo Airways’ fleet to about 40 from 22 aircraft this year through aircraft leases and deliveries of four new jets, including a Boeing Co. 787-9.

Domestic flights, after being limited for more than a month last year, have resumed. Prime Minister Nguyen Xuan Phuc this week ordered ministries to study the use of a “vaccine passport” and gradual reopening of international flights.

The airline reported a pretax profit of 400 billion dong last year, Quyet said. Bamboo Airways aims to increase its market share to 30% this year from about 20% currently, Quyet said. The company has yet to release its 2021 earnings target.

The airline is asking the government to help it secure long-term loans totaling 5 trillion dong from commercial banks with preferential interest rates, or a central bank refinancing loan for the same amount at the rate of 0%, according to a March 19 statement on the government’s website.