Leading Japanese carrier to acquire Vietnam Airlines stake

The strategic alliance will help the two airline carriers take maximum advantage of air traffic growth between Japan and Vietnam by operating 80 weekly flights.

As part of the deal, the two airlines are also looking to cut costs by integrating their operations in aircraft catering, maintenance, check-in and ground handling at airports where they both have a presence, such as Noibai and Narita.

Their frequent flyer programs will be pooled, and ANA will also have the right to elect representatives to the board of Vietnam Airlines to help improve service quality and maximize their business operations by sharing management experience.

“ANA is regarded as one of the best airline in the region and even the world. This strategic alliance shall help Vietnam Airlines acquire new management technology, expand our marketplace, improve service quality and strengthen competitiveness in the international market,” said Pham Viet Thanh, chairman of the Vietnam Airline Corporation

ANA has agreed to purchase an 8.8 percent share in Vietnam Airlines. Photo: FT

Shinya Katanozaka, chief executive of ANA, recently told the Financial Times he will step up his international expansion plans this year with a focus on Asia. Vietnam Airlines is an ideal partner based on its similar customer approach and operational effectiveness, he said.

Bloomberg cited Vietnam Airlines General Director Pham Ngoc Minh as saying the deal is expected to be completed in the second quarter this year, and that ANA may increase its stake.

Last year, Vietnam Airline revealed its plan to find a strategic alliance ahead of its IPO and reduce the Vietnamese government's share in the company to 65 percent.

ANA has been seeking to invest in a Southeast Asian airline for years after raising Y170 billion ($1.4 billion) in an equity issue in 2012, but it has struggled to finalize a deal. In 2014, ANA scrapped its $25 million plan to buy a 49 per cent stake in Myanmar’s Asian Wings Airways because of increasing competition.

To support this expansion, ANA has agreed to buy three Airbus A380 aircraft, the world’s largest passenger jet, an ANA representative told the Financial Times.

Despite the deal, the two carriers are part of different alliances: ANA is a member of Star Alliance with Singapore Airlines and United Airlines, while Vietnam Airlines is a member of SkyTeam along with Air France and Korean Air.

ANA is the biggest operator of the Boeing 787 Dreamliner, having taken possession of more than half of the 83 long-haul aircraft it has ordered.