Aviation sector attracts bankers Injecting money into airlines is not the choice of short- term investors, but airlines’ shares are very attractive in the eyes of bankers, even though the ratio of profit of revenue is not high. The national flag air carrier Vietnam Airlines on November 14 sold 49 million shares in its IPO (initial public offering), reaping VND1.093 trillion, or $51.3 million. The IPO was, as described by Vietnam Airlines, successful with the result meeting its expectations. The majority of shares were sold to Techcombank and Vietcombank which bought the shares to hold 1.82 percent and 1.6 percent of Vietnam Airlines’ chartered capital, respectively. As such, Techcombank and Vietcombank, following HD Bank, have poured money into air carriers. HD Bank now holds 10 percent of the shares of Vietjet Air. The former finance director of an airline noted that airlines’ shares are attractive not because of the airlines’ profits, but because of the long-term benefits bankers can expect. “The airlines’ profit is low if compared with the revenue,” he explained. “However, the revenue from transport services, air ticket sales and salaries is really a big cake for banks.” It is estimated that Vietnam Airlines earns VND50 trillion every year from transport services. Besides, banks can also expect capital from the airline’s air ticket sales to 1.2 million passengers a month, and from money paid to 10,000 workers of Vietnam Airlines. “Bankers expect to earn money from providing services to Vietnam Airlines, rather than from Vietnam Airlines’ dividends,” he noted. Dinh The Hien, a renowned economist, noted that airlines’ shares do not attract small and short-term investors, who hope to make profit when share prices increase. Vietnam Airlines’ shares attract big institutional investors who seek safe long term investments. When asked to comment on why foreign institutional investors did not buy Vietnam Airlines’ shares, a finance expert said the air carrier only offered to sell 3.5 percent of chartered capital, a modest proportion, and therefore, is unattractive to them. However, Techcombank and Vietcombank have reasons to invest in Vietnam Airlines. Both banks have been providing banking services to Vietnam Airlines for many years, and have long term relations with the air carrier. Pham Quang Dung, general director of Vietcombank, said the bank has been lending to Vietnam Airlines, providing capital management, and domestic and overseas payment and card services. Meanwhile, according to Techcombank’s deputy general director Nguyen Canh Vinh, Techcombank joined many projects to provide syndicated loans to Vietnam Airlines to fund the air carrier’s purchase of aircraft . After the successful IPO, Vietnam Airlines plans to sell another 282 million shares, or 20 percent of its chartered capital to strategic investors. BSC, the consultant for Vietnam Airlines’ IPO, said the air carrier wants to seek an investor in the aviation sector and one or two finance investors, who can help it arrange capital for the plans to expand its fleet. Thanh Mai, VietNamNet Bridge