Vietnam Airlines (VN, Hanoi Noi Bai International) has submitted a proposal to the Vietnamese government in which it maps out a phased reduction in the state's shareholding in the carrier. The move follows the passing of Decision No. 1232/QD-TTg on August 17, 2017, which approved government divestiture from state-owned enterprises (SOEs) and corporations for the period of 2017-2020.

At present, Vietnam Airlines’ chartered capital stands at VND12.27 trillion dong (USD539.88 million), of which Hanoi currently controls 86.16% through the Ministry of Transport, followed by Japan's ANA Holdings with 8.77%, and local firms with the remaining 5%.

According to the Vietnam Investment Review, the plan covers the airline's operations over the period 2017 to 2020 and would see the state's equity watered down via a two-phased approach.

For the plan covering 2017-2018, which was approved in May, Vietnam Airlines will boost its charter capital by issuing more than 191 million shares to existing shareholders valued at VND10,000 dong (USD0.44 each). Proceeds will be used to invest in the company’s A350 and B787 order books as well as to raise its floating capital. State shareholders will also sell their 57.9 million call options, equivalent to a 4.1% stake.

Should the sale close during the first quarter of 2018 as anticipated, the carrier will raise its charter capital to VND14 trillion (USD616 million) and equity capital to VND16 trillion (USD704 million).

For the plan covering 2018-2019, Vietnam Airlines intends to continue along the same path issuing between 10 to 20% in new shares to the market. This will further dilute the state's ownership of the airline by another 10-15% stake to 60-65%.

The ultimate objective is to water down government control of the airline to 51%.

Earlier this quarter, Chief Executive Officer Duong Tri Thanh said Vietnam Airlines may choose to sell shares to new investors via a private placement, issue shares to current shareholders, or take other measures according to regulations and market trends. Among the options considered was disposing of the state's aforementioned 4.1% stake to a foreign carrier.