Vietnam Aircraft Leasing Company to sell five ATR aircraft

The aircraft, which are being operated by Vietnam Airlines for short-haul flights, will be offered at a reserve price of VND215 billion (US$9.62 million) each at auction on August 5.

According to the Property Auction Service Center under the Hanoi Department of Justice, which represents VALC in the auction, the five aircraft have been financed under an Export Credit Agency (ECA) scheme. They were bought with the backing of Thang Long Limited, a special purpose company set up by lender Credit Agricole Corporate and Investment Bank (CIB).

In its business plan for the 2016-2020 period, Vietnam Airlines will stop operating ATR aircraft from this year as most airports have been ungraded to handle bigger jets.

The 2016 annual shareholder meeting of VALC in May also approved Vietnam Airlines’ plan to terminate a contract to lease the five ATR-72-500s.

VALC was established by Vietnam Airlines and the Bank for Investment and Development of Vietnam (BIDV) to buy and lease aircraft.

Earlier in April, Vietnam Airlines unexpectedly asked its shareholders for approval to sell two Boeing 777-200ER aircraft, and also sell and lease back three new A350 aircraft, which will be delivered in the next two years.

Explaining for the planned sale of the new A350s, the airline said due to pressure from debt, it has decided to reduce borrowing with Government guarantees.

The move, which is common in the aviation industry, will help the airline clean its balance sheet without affecting its operations, according to Vietnam Airlines.

Last week, Jetstar Pacific, of which Vietnam Airlines owns 70%, signed a contract to purchase 10 Airbus A320 CEO Sharklet aircraft after Vietnam Airlines and Qantas Group had invested US$139 million in the budget carrier to expand its fleet.

Vietnam Airlines also transferred some domestic routes to the carrier.

Competition from low-cost carriers forces Vietnam Airlines to pour more capital into Jetstar Pacific to maintain its domestic market share.