AirAsia JV in Vietnam aimed at expanding SE Asia operations

AirAsia is expanding its operations in Southeast Asia, with the proposed lowcost carrier (LCC) joint venture (JV) with Gumin Co Ltd and Hai Au Aviation Joint Stock Co.
AirAsia, in a statement to Bursa Malaysia, said its unit AirAsia Investment Ltd (AAIL) had signed a shareholders agreement and a share subscription agreement with Gumin, Tran Trong Kien and Hai Au Aviation (HAA) to establish an LCC in Vietnam.
HAA, which operates a general aviฌation business in Vietnam, will form the vehicle for the JV.
Currently, HAA has a paidup charฌter capital of 1 billion Vietnam dong (Bt150 million) and undertakes to increase its charter capital to 1 trillion dong for the JV.
It said AAIL will hold a 30percent stake or 30 million shares; Gumin 69.9 per cent (69.99 million shares) and Tran one share.
AAIL and the JV company also signed a new shareholder loan agreeฌment. Under the deal, AAIL will proฌvide a loan of US$2 million (Bt72 milฌlion). Separately, Gumin will provide $4 million to the JV Co.
“The rationale for the JV is to be an airline in Vietnam which offers an affordable but highquality airline service to Vietnamese and foreign tourists by leveraging the bestinclass LCC business model which is expected to give the Vietnamese population a greater choice as well as spur overall economic growth.
“Improving connectivity in Vietnam would further support an uptick in GDP, providing a boost in multiple industries namely tourism, export related industries, logistics, airฌport retailers and airline support industries.
“An increase in connectivity will also stimulate demand for air travel amongst the population, opening doors to studies abroad, workrelated travel and sprouting of new small and medium industries,” it said.
AirAsia said the JV will require a capitalisation of one trillion dong of which, AirAsia will contribute 30 per cent (300 billion dong) of the aforeฌsaid capital, with further support proฌvided, at the discretion of the Board of AirAsia as loans, advances or other securities it sees fit.
“This commitment further cements AirAsia’s belief that this is a key strategic JV in the region. AirAsia will raise internal funding for its porฌtion of the equity,” it said.