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Bamboo Airways seeks to file IPO application

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Vietnamese airline Bamboo Airways announced on Friday March 19 that it hoped to go public and be listed on the stock exchange. Known as an IPO or initial public offering, this act allows a company to issue shares of the company to the public – primarily as a means of raising capital for future growth and expansion. . Let’s see what the airline has planned …

While the airline’s flights fell to just 238 for the month of April, Vietnam’s relative success in dealing with the global health crisis has allowed it to provide better coverage than other carriers around the world. Photo: Bamboo Airways

Become public

According to DealStreetAsia, Bamboo Airways aims to list on a local exchange during the third quarter. More specifically, the airline wants to offer 105 million shares on one of the two Vietnamese stock exchanges: the Ho Chi Minh City Stock Exchange (HOSE) or the Hanoi Stock Exchange (HNX).

The airline aims to sell at an initial price of 60,000 dong, or $ 2.60. By doing the math, if all the shares sold at that price, the company would raise the equivalent of $ 2.73 billion in Vietnamese dong.

“Marketthe conditions are met for the (SEO) plan, Bamboo Airways Chairman Trinh Van Quyet said in a statement released by Reuters.

Photo: Michael Coghlan via Wikimedia Commons

Plans to increase competition

Reuters reports that the airline aims to increase its domestic market share to 30% by the end of this year. It is currently at 20%. The main competition in this sector includes:

  • Vietnam Airlines, the country’s flag carrier
  • VietJet, a growing low-budget airline
  • Low budget carrier and subsidiary of Vietnam Airlines, Pacific Airlines. This carrier was more recently known as JetStar Pacific until it was sold last year.

With only five aircraft, the VASCO (Vietnam Air Services Company) would also technically be called a competitor but not to the same extent as those mentioned above.

Bamboo Airways’ position in the market as a ‘hybrid carrier’ is unique and ambitious, as explained on its website:

“An airline with a new development model, competitively priced 5-star service like Bamboo Airways will be a new milestone in Vietnam’s aviation industry.” -Bamboo Airways

Therefore, if the airline hopes to deliver a premium level of service at a price close to a traditional budget carrier, we would expect its profit margins to be slimmer than those of its competitors. Of course, if he can meet his demands, customers should flock to the carrier for his better and cheaper product.

The airline reported a humble pre-tax profit of 400 billion dong ($ 17,400) in 2020. Another impressive figure given the significant losses experienced by other airlines around the world. Photo: MELV_L-MACSR via Wikimedia Commons

In addition to increasing its domestic market share, the carrier is targeting an expansion of its aircraft fleet to 40 by the end of 2021. This represents an increase of around 40% over the current size of its fleet. of 28 planes.

So, would you buy shares of Bamboo Airways? Let us know if you think it would be a good investment by leaving a comment.

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