VietJet has delayed plans for an initial public offering (IPO) because of “a huge volume of documentation to process and complete for this project.” VietJet is to list in either Hong Kong or Singapore but it must first launch an IPO in Vietnam as per local law.
There is no doubt that any IPO would be popular with investors, at the right price. Given the lack of previous investment opportunities coming out of Vietnam, it is likely that pressures on IPO pricing targets will be significant.
The airline is going to be one of the largest customers for aircraft lessors over the coming years and its traffic figures are very strong indeed. Make sure you attend the Airline Economics Growth Frontiers Hong Kong event on November 1-3, 2016 where VietJet is keynoting.
Meanwhile, Royal Dutch airlines KLM announced this week that it would be temporarily suspending flights to Cairo for "economic reasons" from January 8, 2017.
“The devaluation of the Egyptian pound and the decision of the Central Bank of Egypt to impose restrictions on the transfer of foreign currency out of Egypt have a negative impact on results of KLM,” the airline said in a statement.
IATA warned Egypt in August that it “risks damaging its aviation industry if it continues to block the release of hundreds of millions of dollars owed to foreign airlines.” Egypt owes around $250 million of local ticket sales to international airlines. Even though this is down from the high mark of $291 million in June, it is still an unacceptable turn of events. One of the top tourist destinations in the world is effectively cutting itself off from the outside world, which will lead to further disintegration of the tourist sector that supports over 40% of the Egyptian economy.
We should expect other airlines to start pulling aircraft out of the Egyptian market shortly, which begs the question whether all of those aircraft can be re-deployed, given that Venezuela, Nigeria and other previously major long-haul destinations are all being cut by the European and US majors in particular. It might be that airlines ground the older aircraft and move to sell them faster than envisaged not 12 months ago.
Aviation 100 Asia & Pacific 2016 Awards Survey:
https://www.surveymonkey.co.uk/r/Aviation100AsiaPac2016
Aviation 100 Middle East & Africa 2016 Awards Survey:
https://www.surveymonkey.co.uk/r/Aviation100MidEastAfrica2016
Philip Tozer-Pennington
philipt@aviationnews-online.com