Vietnam’s Bamboo Airways planning an IPO next year

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Vietnam’s Bamboo Airways started flying only this past January but is already planning an IPO – not in the distant future but in 2020, chairman Trinh Van Quyet told various media this week. He did not say what bourse Bamboo would list on.

From launch to IPO in under two years would surely set an airline record. But aspirations lately have blurred into quickly changing plans amidst frenetic development. That casts doubt on Bamboo’s 2020 IPO as well as larger business positioning and if constrained aviation has room to let Bamboo expand.

Bamboo hopes to raise a small US$100 million from the IPO, which could purchase only about two narrowbody aircraft but not a single widebody 787 that Bamboo plans to acquire to fly to the United States. Bamboo is owned by FLC Group, a local conglomerate spanning property and leisure travel. Its private ownership reflects ambition and capability of non-state-owned firms as Vietnam’s economy privatises.

As a full-service airline, Bamboo is a rare start-up for Asian aviation. Over the last decade, most start-ups outside of mainland China have been low-cost carriers. Bamboo’s fleet comprises 10 aircraft and it has received government approval to grow to 30 in 2023.

Aspiration is also seen at VietJet, the privately-owned LCC that has quickly grown to approximately 70 aircraft. Aside from a sub-scale subsidiary in Thailand, VietJet has mostly remained disciplined to its business model. Bamboo has made a few evolutions in its short history.

Quyet told the Financial Times in June that Bamboo would lease used A380s to accelerate growth, but Bamboo quickly said that was only a study that had been discarded.

The industry expected Bamboo to take widebody aircraft before Bamboo receives its first 787 ordered from Boeing. That appeared confirmed when a second-hand A330 emerged from a European paintshop in Bamboo’s livery in preparation for delivery. Bamboo dismissed that as a media rumour without commenting on the fact a plane was expensively painted in Bamboo’s livery.

The A330 saga was taken over by Bamboo announcing a new development: it would lease 787-9s from undisclosed companies and put them into service this year ahead of its own 787s fresh from the Boeing factory. There has been limited trading so far of 787s, which are still relatively new, and the leased aircraft would arrive only shortly before its own.

Bamboo’s narrowbody fleet presents a long-term worry. In a quest for break-neck expansion, Bamboo has taken a hodgepodge of second-hand aircraft in addition to its own new aircraft. The mixed fleet presents inefficiencies and leasing contracts are often for multiple years, meaning as Bamboo matures it will have to wait out contracts or pay penalties for early returns.

Industry observers have wondered how Vietnam’s growth can be accommodated. The country’s airports are congested, as are many international destinations. There are also questions how the government views fast-growing private airlines taking marketshare from state-owned Vietnam Airlines, a full-service airline which also owns low-cost carrier Jetstar Pacific.

VietJet’s growth seemed challenging enough to the status quo before Bamboo’s entry. Other start-ups are on the way, with three airlines wanting to launch in Vietnam: Vinpearl, Vietravel and KiteAir.

Reporting by Will Horton @ Forbes