VNA IPO-Prospectus ENG 26Sept14-Final

8/9/2019 VNA IPO-Prospectus ENG 26Sept14-Final

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INVESTOR SHOULD CAREFULLY READ THIS PROSPECTUS AND THE AUCTION

REGULATION IN ITS ENTIRETY BEFORE MAKING A DECISION TO PURCHASE

B I D V S E C U R I T I E S C O M P A N Y


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THE AUCTIONEER

HO CHI MINH STOCK EXCHANGE

Address: 16 Vo Van Kiet Str., 1 Dist., Ho Chi Minh City

Telephone: (84.8) 38217713 Fax: (84.8) 38217452

THE ISSUER

VIETNAM AIRLINES COMPANY LIMITED

Address: 200 Nguyen Son Str., Long Bien Dist., Hà Nội

Telephone: (84.4) 38272289 Fax: (84.4) 38722375

DOMESTIC ADVISOR

BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM

SECURITIES JOINT STOCK COMPANY

Headquarter: 10th Floor BIDV Tower, 35 Hàng Voi Str., Hoan Kiem Dist, Ha Noi

Telephone: (84.4) 39352722 Fax: (84.4) 22200669

Branch: 9th Floor, 146 Nguyen Cong Tru Str., 1 Dist., Ho Chi Minh City

Telephone: (84.8) 39142956 Fax: (84.8) 38218510

THIS PROSPECTUS AND SUPPORTING DOCUMENTS ARE PROVIDED BY THE ISSUER, THE AUCTIONEER,

THE ADVISOR, AND AGENCIES LISTED IN THE AUCTION REGULATION


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TABLE OF CONTENTS

Part I. Introduction . . . . . . . . . . . . . . . . . . . . . . . 4

The Public Offering . . . . . . . . . . . . . . . . . . . . 5

Post IPO Ownership Structure . . . . . . . . . . . . 5

Part II. General Information . . . . . . . . . . . . . . . . 6 Legal Basis Of The Offering . . . . . . . . . . . . . 6

Auctioneer, Issuer And Domestic Advisor’s

Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

The Responsibles For Information Related To

Vietnam Airlines’equitization . . . . . . . . . . . . 9

Forward-Looking Statements . . . . . . . . . . . . . 11

Part III. Overview Of The Equitized

Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Company Profile . . . . . . . . . . . . . . . . . . . . . . 12

Management . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Valuation Results . . . . . . . . . . . . . . . . . . . . . . 23

Principal Assets Of Our Business . . . . . . . . . 26

Part IV. Business . . . . . . . . . . . . . . . . . . . . . . . . 32

Our Business Prior To Equitization . . . . . . . . 32

Group Operating And Financial Results . . . . 50

Subsidiary Operational And Financial

Performance . . . . . . . . . . . . . . . . . . . . . . . . . . 55

The Airlines Industry And Our Competitive

Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Part V. Post-IPO Strategic Direction . . . . . . . . . 60

Post-IPO Company Profile . . . . . . . . . . . . . . . 60

Post-IPO Strategic Direction . . . . . . . . . . . . . 64

Part VI. The Offering . . . . . . . . . . . . . . . . . . . . . 77

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 77

The Offering And Payment Method . . . . . . . . 81

Use Of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 85

Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Part VII. Conclusion . . . . . . . . . . . . . . . . . . . . . . 87

Part VIII. Appendices . . . . . . . . . . . . . . . . . . . . . 88 Appendix 1: Operating Performance Of Our

Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Appendix 2: Property As Of

March 31st 2013 . . . . . . . . . . . . . . . . . . . . . 107

Appendix 3: On-Going Contracts And

Commitments . . . . . . . . . . . . . . . . . . . . . . . 113


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PART I. INTRODUCTION

This is an innitial public offering of Vietnam Airlines’ common stock, a step in our

equitization process.

Neither we, nor the advisors, have authorized any party to provide you with additionalinformation or information different from that contained in (i) this prospectus, (ii) the Bidding Form,

and the (iii) Auction Regulation. You should rely only on these documents to make purchase decision.

We take no responsibility for, and can provide no assurance as to the reliability of, any informationthat others may give you. We are offering to sell shares of our common stock only in jurisdictionswhere offers and sales are permitted. If you have any questions regarding this prospectus, you should

inquire independent advisors.

The information appearing herein is accurate only as of the date of this prospectus. Our business, financial conditions, liquidity, and operating results may have changed since that date.

Vietnam Airlines Ltd. is a 100% state-owned company. We are currently in the equitization process to raise capital through shares offering while retaining the State’s existing equity. The number

of shares issued in the upcoming offering will account for 25% of our share capital after equitization.

We will continue to assume the existing rights, obligations, and benefits in accordance withapplicable laws. Upon obtaining business license, Vietnam Airlines will have legal capacity as statedin the law of Vietnam including official seal and corporate bank account, and will operate under the

State’s law and our Charter.

As a part of our equitization process to become a joint stock company, we are offering to sell

our Vietnam Airlines’shares. Investors will be Vietnam Airlines Joint Stock Company’s shareholdersand assume all rights and obligations as stated in the State’s law and our Charter.


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THE PUBLIC OFFERING

Common stock offered to public . . . . . . . . . . . . . . . . . . . . . . . 49,009,008 shares

Par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 VND

Public Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,300 VND per share

Minimum bidding volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 shares

Maximum bidding volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,009,008 shares

Type of auction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-level auction at Ho Chi Minh Stock

Exchange. Investors will submit Bidding Forms at designated agencies and the forms

will be forwarded to the stock exchange.

Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Domestic & foreign individual andinstitutional investors meeting therequirements in The Auction Regulation of

Vietnam Airlines.

Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provided by agencies in Auction Regulationand their websites, and at www.hsx.vn,

www.bsc.com.vn and

www.vietnamairlines.com.

Registration locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . At designated agencies stated in the Auction

Regulation.

Deadlines for Registration Form submission, Deposit, andBidding Form acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . As stated in the Auction Regulation

Deposit requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10% of registered shares at par value.Bidding Form submission period . . . . . . . . . . . . . . . . . . . . . . As stated in the Auction Regulation.

Auctioneer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HO CHI MINH STOCK EXCHANGE

Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Vo Van Kiet Str., 1 Dist., Ho Chi MinhCity

Shares Payment, outstanding payment, and deposit refund

deadlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As stated in the Auction Regulation.

POST IPO OWNERSHIP STRUCTURE

% Number of shares

Total value

(billion VND)

The State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.00 1,057,638,000 10,576.38

Additional shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.00 352,546,000 3,525.46

Shares offered to public . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.475 49,009,008 490.09

Shares offered to foreign strategic investors . . . . . . . . 20.00 282,036,800 2,820.36

Shares offered to employees at a discount . . . . . . . . . . 1.475 20,795,100 207,951

Shares offered to Vietnam Airlines’ Union . . . . . . . . . 0.05 705,092 7.05

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 1,410,184,000 14,101.84


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PART II. GENERAL INFORMATION

LEGAL BASIS OF THE OFFERING

Legal basis for state-owned company equitization

Decree No. 59/2011/NĐ-CP dated 18/07/2011 by the Government on wholly state-ownedcompany equitization;

Decree No. 189/2013/NĐ-CP dated 20/11/2013 by the Government amending and

supplementing a number of articles of Decree 59/2011/NĐ-CP;

Circular No. 196/2011/TT_BTC dated 26/12/2011 by the Ministry of Finance on initial

public offering and use of proceeds of 100% state-owned enterprises;

Circular No. 202/2011/TT-BTC dated 30/12/2011 by the Ministry of Finance on therestructuring and valuation of 100% state-owned enterprises for equitization;

Circular No. 33/2012/TT-BLĐTBXH by the Ministry of Labor, Invalids and Social Affairs

on employee benefits stated in Decree 59/2011/NĐ-CP dated 18/07/2011 by TheGovernment on 100% state-owned company equitization;

Decision No. 929/QĐ-TTg dated 17/07/2012 by the Prime Minister ratifying “Restructuring

state-owned enterprises, focusing on large groups and corporations for the period 2011-

2015 ” project;

Other relevant regulations.

Legal basis for Vietnam Airlines’ equitization

Decision No. 172/QĐ-TTg dated 16/01/2013 by the Prime Minister ratifying Vietnam

Airlines equitization project for the 2012-2015 cycle;

Dispatch No. 1567/TTg-CN dated 18/10/2007 by the Government Office ratifying aircraft purchases and fleet development plan until 2015 and 2020;

Dispatch No. 1567/TTg-KTN dated 22/09/2008 by the Prime Minister ratifying fleet

development plan of Vietnam Airlines and Vietnam Aircraft Leasing Company;

Dispatch No. 291/VPCP-ĐMDN dated 14/01/2008 by the Government Office on Vietnam

Airlines’ equitization;

Dispatch No. 2129/VPCP-ĐMDN dated 15/11/2011 by the Prime Minister ratifyingVietnam Airlines’ restructuring plan

Dispatch No. 3184/VPCP-ĐMDN dated 07/05/2014 by the Government Office ratifyingVietnam Airlines’ valuation result;

Decision No. 1964/QĐ-BGTVT dated 27/06/2007 by the Minister of Transport on

establishment of Vietnam Airlines’ equitization steering committee;

Decision No. 1641/QĐ-BCĐ.CPH-TCTHK dated 14/08/2007 by the Head of equitizationsteering committee on establishment of steering committee’s support team;

Decision No. 517/QĐ-BGTVT dated 12/03/2012 by the Minister of Transport onstructuring Vietnam Airlines’ equitization steering committee;

Decision No. 763/QĐ-BCĐ.CPH-TCTHK DATED 18/05/2012 by the Head of equitization

steering committee on structuring of support team;


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Decision No. 1792/QĐ-BCĐ.CPH/TCTHK dated 29/10/2012 by the Head of equitization

steering committee on restructuring of support team;

Dispatch No. 315/BGTVT-TC dated 09/01/2013 by the Ministry of Finance on VietnamAirlines’ date of valuation for equitization;

Resolution No. 83/NQ-CP dated 08/07/2013 by the Prime Minister on Monthly Government

Meeting in June/2013, which contains relevant information on aircraft purchase guaranteemechanism for Vietnam Airlines;

Decision No. 2087/QĐ-BGTVT dated 18/07/2013 by the Ministry of Finance on changes toVietnam Airlines’ steering committee members;

Decision No. 2572/QĐ-BGTVT dated 28/08/2013 by the Ministry of Finance on changes toVietnam Airlines’ steering committee members;

Decision No. 2848/QĐ-BGTVT dated 19/09/2013 by the Ministry of Finance on changes to

Vietnam Airlines’ steering committee members;

Dispatch No. 10191/BGTVT-QLDN dated 25/09/2013 by the Ministry of Transport on

provisions for Vietnam Airlines’ equitization fee; Dispatch No. 399/QĐ-BGTVT dated 12/02/2014 by the Ministry of Transport on changes

to Vietnam Airlines’ equitization steering committee members;

Decision No. 1807/QĐ-BGTVT dated 14/05/2014 by the Ministry of Finance ratifying

Vietnam Airlines’ valuation;

Decision No. 1611/QĐ-TTg dated 10/09/2014 by the Prime Minister ratifying VietnamAirlines’ equitization plan;

Decision No. 3584/QĐ-BGTVT dated 24/09/2014 by the Minister of Transport ratifying

public offering price and auctioneer for Vietnam Airlines’ initial public offering.


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AUCTIONEER, ISSUER AND DOMESTIC ADVISOR’S CONTACTS

Auctioneer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ho Chi Minh Stock Exchange

Headquarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Vo Van Kiet Str., 1 Dist., Ho Chi Minh City

Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84.8) 38217713

Fax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84.8) 38217452

Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.hsx.vn

Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vietnam Airlines Ltd.

Trading name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIETNAM AIRLINES

Headquarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 Nguyen Son Str., Long Bien Dist., Ha Noi

Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84.4) 38272289

Fax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84.4) 38722375

Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.vietnamairlines.com

Domestic Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank for Investment and Development of Vietnam

Securities Joint Stock CompanyHeadquarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10th floor, BIDV Tower, 35 Hang Voi, Hoan Kiem

Dist., Ha Noi

Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84.4) 39352722

Fax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84.4) 22200669

Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.bsc.com.vn


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THE RESPONSIBLES FOR INFORMATION RELATED TO VIETNAM

AIRLINES’EQUITIZATION

Vietnam Airlines’ equitization steering committee

Name Tittle Position

Mr. Pham Viet Thanh . . . . . . Chairman of Vietnam Airlines HeadMr. Nguyen Chien Thang . . . Director General of Department of Enterprise

Management - Ministry of Transport

Deputy Head

Mr. Pham Van Duc . . . . . . . . Deputy Director General of Agency for Corporate

Finance - Ministry of Finance

Member

Ms. Dao Thanh Thao . . . . . . . Deputy Director General of Department of Finance -

Ministry of Transport

Member

Mr. Vu Anh Minh . . . . . . . . . Deputy Director General of Department of Enterprise


Member

Mr. Pham Ngoc Minh . . . . . . Member of Vietnam Airlines’ Board of Management,

Chief Executive Officer of Vietnam Airlines

Member

Mr. Luu Van Hanh . . . . . . . . Member of Vietnam Airlines’ Board of Management MemberMr. Nguyen Huy Trang . . . . . Member of Vietnam Airlines’ Board of Management Member

Ms. Nguyen Thi Thanh Van . Member of Vietnam Airlines’ Board of Management Member

Mr. Đao Quang Minh . . . . . . Director of Vietnam Airlines Human Resources Dept., Member

Mr. Tran Thanh Hien . . . . . . CFO & Chief Accountant Vietnam Airlines Member

Mr. Pham Ngoc Vui . . . . . . . Vietnam Airlines’ Trade Union President Member

Mr. Tran Van Thang . . . . . . . Senior Associate of Department of Business Innovation

- Government Office

Member

Mr. Trinh Ngoc Thanh . . . . . Senior Associate of Department of Enterprise


Member

Ms. Pham Thi Giang . . . . . . . Senior Associate of Department of Finance - Ministry

of Transport

Member

Issuer’s representatives

Mr.Pham Viet Thanh . . . . Chairman of Vietnam Airlines

Mr. Pham Ngoc Minh . . . Board of Management, Chief Executive Officer of Vietnam Airlines

The listed individuals are responsible for the accuracy, integrity, and legality of the informationand data in this prospectus for investors to make reasonable assumptions regarding our assets,

business activities, financial conditions, performance, and future results before purchasing our shares.

Domestic Advisor’s representatives

Mr. Do Huy Hoai . . . . . . . . . CEO of Bank for Investment and Developement of Vietnam Securities

JSC

The Domestic Advisor, Bank for Investment and Development of Vietnam Securities Joint Stock

Company (BSC), prepared this prospectus based on the information provided by Vietnam Airlines.BSC has followed the guidelines required by applicable laws without providing any assurance to the

value of the securities.


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ABBREVIATIONS AND GLOSSARY

Certain airline industry terms and other terms are used in this prospectus to describe our business

and financial performance.The following is a list of terms and abbreviations used herein:

ASK . . . . . . . . . . . . . . . . . Available Seat Kilometers - a measure of an airlines’ passenger

carrying capacity, equals the number of seats available multiplied bythe distance travelled in kilometers

ATK . . . . . . . . . . . . . . . . . Available Tonne Kilometers - a measure of an airlines’ total capacity,

equals capacity in tonnes multiplied by the distance traveled in

kilometers

BSP . . . . . . . . . . . . . . . . . . Billing Settlement Plan - a system facilitates and simplifies the selling,

reporting and remitting procedures of IATA Accredited Passenger

Sales Agents

CLMV . . . . . . . . . . . . . . . Cambodia - Laos - Myanmar –Vietnam

Codeshare . . . . . . . . . . . . . An arrangement among participating airlines to share one same flight

Equitization . . . . . . . . . . . A term Vietnam uses to describe the process of issuing shares in the

state-owned enterprises to private investors and transforming them into

oint stock company

Charter capital . . . . . . . . . A term Vietnam uses to describe the aggregate par value of the numberof issued shares. The number of issued shares is the number of sharesfully paid up to the company by shareholders.

GSA . . . . . . . . . . . . . . . . . General Sales Agent

IATA . . . . . . . . . . . . . . . . International Air Transport Association

Interlining . . . . . . . . . . . . . An agreement among participating airlines to serve passengers with

connecting flights

Decree 59 . . . . . . . . . . . . . Decree No. 59/2011/NĐ-CP dated 18/07/2011 by the Government on

100% state-owned company equitization

PSA . . . . . . . . . . . . . . . . . . Passenger Sales Agent

RPK . . . . . . . . . . . . . . . . . Revenue Passenger Kilometers - a measure of an airlines’ traffic,

equals the number of revenue-paying passengers multiplied by the

distance traveled in kilometers

RTK . . . . . . . . . . . . . . . . . Revenue Tonne Kilometers- a measure of an airlines’ total traffic

(cargo and passenger), equals the actual freight in tonnes multiplied by

the distance traveled in kilometers. (RPK is generally converted to

RTK with each passenger equivalent to 90kg, including baggage)

SPA . . . . . . . . . . . . . . . . . . An agreement between airlines regarding price for interlining


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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements based on our current projections and

expectations about our future developments and financial performance, especially in the “Post-IPO

Strategic Direction” section. Forward-looking statements are not historical facts and subject to variousrisks and uncertainties. Actual outcomes may materially differ from what indicated in these

statements.

Forward-looking statements reflect our current views with respect,but not limited to:

Vietnam Airlines’ company structure after equitization;

Changes in the legal environment;

Vietnam’s aviation industry outlook;

Our relationships and collaboration with foreign strategic investors and partners’ support in

our operations and organizational management;

Our business strategies and its implementation;

Our business plan for the 2014-2018 period.

Statements regarding our future financial perfomance, objectives, strategies, business model,organizational structure, and operations after equitization are forward-looking. Those statements mayuse words such as “will,” “believe,” “predict,” “estimate,” “project,” “may,” “plan,” “expect,”

“intend,” “potential,” “should,” and other words and terms of similar meaning in connection with a

discussion of future operating or financial performance. While we believe our expectations arereasonable, such statements are not necessarily accurate indications of future results.

We undertake no obligation to publicly update or revise any forward-looking statements, whether

as a result of new information, future events or other circumstances, except as required by law. With

regard to this cautionary annoucement, investors should carefully evaluate all forward-lookingstatements in this prospectus in the context of risks and uncertainties.


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PART III. OVERVIEW OF THE EQUITIZED ORGANIZATION

COMPANY PROFILE

Company background

Vietnamese name . . . . . . . . . . . . . . . Tong Cong ty Hang khong VietnamEnglish name . . . . . . . . . . . . . . . . . . . Vietnam Airlines Company Limited

Transaction name . . . . . . . . . . . . . . . . Vietnam Airlines

Abbreviated name . . . . . . . . . . . . . . . . VIETNAM AIRLINES

Head Office . . . . . . . . . . . . . . . . . . . . . No. 200, Nguyen Son Street, Bo De Ward, Long Bien

District, Hanoi City

Tel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84 4) 38272289

Fax . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84 4) 38722375

Website . . . . . . . . . . . . . . . . . . . . . . . . www.vietnamairlines.com Logo . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax identification number . . . . . . . . . 0100107518

Business registration No.0100107518 issued for the first time by Hanoi Department of Planningand Investment on 30/6/2010 and amended for the 2nd time on 06/12/2013.

An overview of our business

According to the certificate of business registration No. 0100107518 issued by HanoiDepartment of Planning and Investment for registration of the 2nd amendment on 6th December

2013, Vietnam Airlines’ lines of business consist of:

Management consultancy activities, including: Investments, Capital management forinvestment and production business; Foreign investment; Purchase and sale of enterprises;Capital contribution, purchase of shares, transfer of shares or sale of shares;

Air transport of passenger;

Air transport of freight, including transport of luggage, cargo, parcels, parcels, letters;

Services of direct support to air transport, including: General air activities (flying for aerial

photography, geological surveys, calibration of aeronautical stations, repair and

maintenance of high power lines, serving the oil and gas industry, afforestation,

environmental monitoring, search of accidents, medical emergencies, political, economic,social, defense and security missions); Other specialized air services; Supply of commercialservices, tourism, hotels, duty free sales at airports and provinces; other aviation services;Supply of technical ground services; services at the passenger terminals, cargo terminals

and parking services at the airports;

Repair and maintenance of transport vehicles (except for automobiles, motorcycles,

motorbikes and other motor – based vehicles), including: Maintenance of aircraft, engines,spare parts, aviation equipment and other technical equipment;

Manufacture of measuring, testing, navigating and control equipment, including:

Manufacture of components and spare parts, aircraft material, technical equipment and other

contents in the fields of aviation industry; Supply of technical services and spare parts fordomestic and international airlines;


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Operational support services related to transport, including: Freight forwarding services;

Investment and utilization of infrastructure at airports: passenger terminals, cargo terminals,technical infrastructure and services in the line of air transport; Multimodal transport;

Manufacture of aircraft, spacecrafts and related machinery, including : Aircraft export,engines, spare parts and aviation equipment (rent, lease, hire, purchase and sale) and other

items as promulgated by the State; Production, import and export of equipment serving for

the line of air transport;

Restaurant and catering services for mobile service, including: Production, processing,import and export of in-flight meals;

Wholesale of solid, liquid, gas fuels and related products, including: Supply of air

petroleum and grease (including fuel, lubricants and specialized liquid) and other petroleumat the airports and other locations; Export-import of aviation petroleum and grease(including fuel, lubricants and specialized liquid) and other petroleum;

Agents, brokers of auctions, including: Agent of petroleum retail; Agents for airlines,

Manufacturers of aircraft, engines, equipment, aircraft spare parts, international anddomestic transport and tourism companies;

Other currency intermediation, including: Finance and Banking (the enterprise is onlyallowed to operate upon approval from national competent authorities);

Financial leasing activities, including: Financial leasing (the enterprise is only allowed to

operate upon approval of the national competent authorities);

Printing (excluding those prohibited by the State);

Construction of houses in all kinds;

Architectural activities and related technical consultancy, including: constructionconsultancy (excluding design of the works);

Undergraduate and postgraduate training (the enterprise is only allowed to operate uponapproval of the national competent authorities);

Labor supply (excluding brokerage, introduction, employment and labor supply for

enterprises specializing in labor export and supply, management of labor working abroad);

Export and import of labor (the enterprise is only allowed to operate upon approval from thecompetent state competent);

Professional scientific and technical activities;

Business of real estate, land use rights under owners, properties users or leaseholders;

Other operational support services, including: E-commerce services (For lines of business underspecial provisions, the enterprise is only allowed to operate where meeting such provisions as prescribed by law).

Our history

Our corporate history is deeply rooted in the the earliest days of the Vietnam civil aviation

industry, since January 1956 when Civil Aviation Administration was established by the Governmentof Vietnam. From our humble beginning of a small fleet with 05 propeller aircraft of IL 14, AN 2,

Aero 45.., we inaugurated our first domestic service in September, 1956.

Originally, we were established as a State commercial entity serving large scale air transportation

(originally known as the National Air Carrier) in 1993. On May 27, 1995, we were established underthe Decision No. 328/TTg of the Prime Minister merging 20 aviation companies, in which we were

the holding entity.


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For the past 20 years, we have been contributing significantly to the development of the civil

aviation industry, the national economy and Vietnam societal advancement in a time ofindustrialization and reform.

The following table set out several of our development milestones since our inception in 1956:

1956 . . . . . . . . . . . . . The Civil Aviation Administration was established by the Government of

Vietnam, commencing the beginning of the country’s civil aviation industry

1993 . . . . . . . . . . . . . Establishment of Vietnam Airlines

1995 . . . . . . . . . . . . . Establishment of Vietnam Airlines Corporation on the basis of merging Vietnam

Airlines and 20 aviation companies

2002 . . . . . . . . . . . . . Vietnam Airlines introducing new symbol - the Golden Lotus

2003 . . . . . . . . . . . . . Restructued of Vietnam Airlines pursuant to Decision No. 372/QĐ-TTG dated

04/04/2003 issued by Prime Minister, commencing our first Boeing 777 flight,

marking the very first step in our fleet renovation program.

2006 . . . . . . . . . . . . . Became an official member of IATA

2009 . . . . . . . . . . . . . Setting up Cambodia Angkor Air – a joint venture with the Royal Government of

Cambodia with a share capital of 100 million USD, in which VNA holds 49%

2010 . . . . . . . . . . . . . Re-registeried our legal entity to a one member Limited Liability Company

wholly-owned by the Government of Vietnam; becoming the 10th official

member of the global alliance SkyTeam

2012 . . . . . . . . . . . . . Received the transfer of the state capital (68.46%) in Jetstar Pacific Airlines

(JPA) from the Government of Vietnam, and thus becoming the majority

shareholder of the company.

1/2013 . . . . . . . . . . . The Ministry of Transport approved March 31, 2013 as the valuation date of

Vietnam Airlines equitization.

5/2014 . . . . . . . . . . . The Ministry of Transport approved the valuation result of Vietnam Airlines

9/2014 . . . . . . . . . . . The Prime Minister approved the Equitization Plan of Vietnam Airlines

Accomplishment and achievement

Ho Chi Minh Medal, awarded by the President of Vietnam in 2010;

Third-class Independence Medal, awarded by the President of Vietnam in, 2003;

First class Labor Medal, awarded by the President of Vietnam in 1996 & 1997;

Second class Labor Medal, awarded by the President of Vietnam in 2011;

Third-class National Service Medal, awarded by the President of Vietnam in 2010;

Award of Excellence, awarded by Foundation of Technological Development, Vietnam in2000;

Award of Excellence, awarded by the Prime Minister in 2001;

Sao Khue (Venus) Star Award in 2005;

Illuminating Flag of the Government in 2011 (2nd runner-up);

Illuminating Flag of the Government in 2012 (winner);


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And many other noble prizes.

Main lines of business

Air transport

Regular-scheduled flights for both passenger and cargo in the domestic and international

markets;

Irregular-scheduled flights: VIP charter flight and air charter operation.

Codeshare partnership (blocked seat/space) arrangements.

Operational support

Technical and commercial support services to airlines operating in Vietnam’s domestic

airports. This includes technical support for aircraft at the airports, check-in procedures for passengers, luggage, packages and their handling, aircraft interior cleaning services,technical maintenance of equipments and specialized vehicles for aviation services;

Ticket sale representatives for other airlines; foreign exchange services; Other services: commercial advertising on our publications;

aircraft/house/infrastructure/airport facilities leasing; cargo handling and forwardingservices; sale of duty free goods and other services.

Corporate and management structure

Pursuant to Decree No. 183/2013/ND-CP dated November 15, 2013 issued by the Government ofVietnam approving the Corporate Charter and Ownership Structure of Vietnam Airlines, effectivefrom January 5, 2014, Vietnam Airlines, as the one - member Limited Liability Company wholly

owned by the State, is organized and operated under a parent - subsidiary model in accordance with

the provision of law.Our Group structure consists of (i) Parent company (includes Head Offices and the dependent

units); (ii) the Subsidiaries and Associates. The following list sets forth in more details our

organizational structure as approved in our equitization plan:

The Head Office consists of Divisions and Departments;

Dependent Units: Consists of 14 dependent units, 32 branches, and representative offices at20 countries and territories. These are parts of our integrated supply chain.

18 subsidiaries, in which we hold more than 50%, and 8 associates in which we hold 20% toless than 50%. These entities participate directly or indirectly in our aviation supply chain in

order to provide an integrated set of aviation solution, culminating in our products.On the functional levels, we specialize ourselves into departments and divisions to handle our

day-to-day business as well as administration function. The chart in the following page set out ourmanagement structure for the fiscal year 2013:


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TECHNICAL DIVISION

Human resource Dept

Investment dept Finance & Accouting Dept

Training Dept

Vietnam Air service

company (VASCO)

Safety-Quality & Security dept

FLIGHT OPERATION DIVISON

GENERAL SECRETARIAT

COMMERCE DIVISION GROUND SERVICES DIVISION

Cargo Planning &

Marketing Dept

Sales & marketing

Dept

Oversea Branches

(32)

Southern Regional

Branch

Middle Regional

Branch

Northern Regional

Branch

Operation Control

Center

Flight crew 919

Cabin crew

Flight training Center

Legal Dept

Material & SupplyDept

Planing & Development Dept IT Dept

Noibai Operation Center

Marketing Services Dept

TanSonNhat Operation

Center

Danang ground handling

services

TanSonNhat ground

handling services

Noibai ground handling

services

Technical Dept

Party and Youth Union Corporate Affairs

Vietnam AviationInstitute

Heritage magazine

VICE PRESIDENTS, CHIEF ACCOUNTANT

MINISTRY OF

TRANSPORTATION

BOARD OF MANAGEMENT

SUPERVISORY BOARD

PRESIDENT & CEO

Emergency Committee;Safety Committee;

Security Committee;…

Subsidiaries &

Associates

INTERNAL AUDIT DEPT


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MANAGEMENT

Coporate governance structure

Our corporate and management structure consist of:

The Board of Management : is the authorized representative of the Government in Vietnam

Airlines, responsible for the rights and obligations of the State in our business. The term of Membersshall not exceed 05 years. The Members can be reappointed.

The President &CEO: The President&CEO is the legal representative of our company and is incharge of our daily operations in accordance with the objectives, plans, resolutions and decisions ofthe Board of Management and with the corporate charter, prevailing laws and regulations. They are

legally accountable for the performance of their assigned tasks.

Vice Presidents and Chief Accountant: shall be appointed, dismissed, removed (includingcompensations and other benefits removal) by the Board of Management at the proposals of thePresident &CEO. The Vice Presidents take part in, and are legally accountable the daily operations as

assigned and authorized by the President &CEO, and report directly to the President &CEO. The

Chief Accountant reports directly to the CEO and is responsible for: (i) Setting up the accountingsystem, establishing the appropriate protocols and suitable accounting teams; (ii) Making proposal

relating to financial & capital management to ensure the capital needs for business operation; (iii)Assisting the CEO in financial supervision and managing the financial resources at Vietnam Airlinesin accordance with finance & accounting standards and current regulations; (iv) Other rights and

obligations as prescribed by law.

Corporate Departments: Consists of advisory and functional departments with the function ofadvising and assisting the Board of Management, President&CEO in management and administration.

List of Members in the Board of Management and Board of Directors

The Board of Management:

Mr. Pham Viet Thanh - Chairman

Mr. Pham Ngoc Minh - Member -

President &CEO

Mr. Luu Van Hanh - Member

Ms. Nguyen Thi Thanh Van -

Member

Mr. Nguyen Huy Trang - Member

The Board of Directors and Chief Accountant:

Mr. Pham Ngoc Minh - President &CEO

Mr. Phan Xuan Duc - Vice President

Mr. Trinh Hong Quang - VicePresident

Mr. Duong Tri Thanh - Vice

President

Mr. Trinh Ngoc Thanh - VicePresident

Mr. Nguyen Ngoc Trong - VicePresident

Mr. Le Hong Ha - Vice President

Mr. Tran Thanh Hien - Chief

Accountant


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PARENT COMPANY, PRINCIPAL SUBSIDIARIES AND AFFILIATES

Parent company

The Ministry of Transportation holds a 100% stake in Vietnam Airlines.

Subsidiaries and affiliatesThe table in the following page sets forth the information regarding our subsidiaries. For further

information regarding our subsidiaries and associates, see “Appendix I”


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Subsidiary name Head Office Currency

Registered

share capital

Contributed

share capital

Registered

capital of

Vietnam

Airlines

Contributed

capital of

Vietnam Airlines

Vietnam

Airlines’

ownership

Main lines of

business

Vietnam Air Petrol

Company Limited

(VINAPCO)

202 Nguyen Son, Long

Bien, Hanoi

Million

VND400,000 400,000 400,000 400,000 100%

Aviation fuel

trading

Vietnam Airlines

Engineering Company Ltd

(VAECO)

Noi Bai International

Airport, Hanoi

Million

VND1,059,097 1,059,097 1,059,097 1,059,097 100%

Aicraft repair

and

maintenance

Abacus Distribution

Systems (Vietnam) Ltd

#02-05 Prime Centre -

53 Quang Trung –Hanoi

USD 180,000 180,000 180,000 180,000 90%

Automated

reservationservice

Cambodia Angkor Air 1

#206A Preah Norodom

Blvd - Phnom Penh -

Cambodia.

USD 100,000,000 75,000,000 59,000,000 59,000,000 78.67%Air

transportation

Jetstar Pacific Airlines JSC

(JPA)

Floor 3, Vietnam

Airlines Corporation

Building – Tan Binh

District – Ho Chi Minh

City,

Million

VND1,867,438.4 1,867,438.4 1,266,697.8 1,266,697.8 67.83%

Air

transportation

Vinako Forwarding Co.,

Ltd (VINAKO)

49 Truong Son - Ward

2 – Tan Binh District –

Ho Chi Minh City

Million

VND8,578.1 8,578.1 5,579.9 5,579.9 65.05%

Forwarding,

ground

hanlding and

warehousing

services

Aviation Construction

JSC(AVICON)

200/8 Nguyen Son – BoDe Ward – Long Bien

District – Hanoi City

Million

VND26,527.7 26,527.7 17,119.7 17,119.7 64.54%

Civil

construction

Noi Bai Catering Services Noi Bai International Million 50,000 50,000 30,000 30,000 60% In-flight

1Due to commitments upon establishment of Cambodia Angkor Air Joint Venture (K6), the second round of investment period started from 2011, at which point we wouldcontribute a further 49 million USD (not including an investment trust of 10 milions USD), equivalent to capital stake of 49% registered share capital. However, due to thenon-fulfilment of remaining shareholders, our investment at K6 for the fiscal year ended December 31, 2013 is 78,67%. During the 3rd Quarter of 2014, the remainingsharehoders had completed their obligations and VNA’s stake at K6 was 49%.


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Registered

share capital

Contributed

share capital

Registered

capital of

Vietnam

Airlines

Contributed

capital of

Vietnam Airlines

Vietnam

Airlines’

ownership

Main lines of

business

JSC (NCS) Airport – Soc Son


VND catering

Vietnam Airlines Caterers

Ltd2

Tan Son Nhat

International Airport –

Tan Binh District – Ho

Chi Minh City

USD 84,603.3 84,603.3 84,603.3 45,004.4 100%In-flight

catering

Noi Bai Cargo Terminal

Services JSC (NCTS)


Airport – Soc SonDistrict – Hanoi City

Million

VND 95,850 95,850 52,840,3 52,840,3 55.13% Cargo services

Tan Son Nhat Cargo

Services Company

Limited (TCS)

46-48 Hau Giang -

Ward 2 – Tan Binh

District – Ho Chi Minh

City

Million

VND93,726 93,726 51,549 51,549 55% Cargo services

ir Services Supply Joint

Stock Company

(AIRSERCO)

No. 1 - Lane 196 –

Nguyen Son – Long

Bien District – Hanoi

City

Million

VND28,000 28,000 14,838.2 14,838.2 52.99%

General

aviation

services

viation

Information and

Telecommunications JSC

(AITS)3

414 – Nguyen Van Cu

– Long Bien District –

Hanoi City

Million

VND55,800 58,031.7 30,600 30,600 52.73% IT services

Viet Flight Training (VFT)

117 Hong Ha - Ward 2

– Tan Binh District –Ho Chi Minh City

Million

VND 100,000 66,000 34,000 34,000 51.52% Pilot training

Tan Son Nhat Cargo

Services and Forwarding

No. 6 Thang Long -

Ward 4 – Tan Binh

Million

VND51,430 51,430 26,230 26,230 51%

Cargo,

forwarding

2VACS was converted from a joint venture company. The difference between the registered share capital and share capital of the VNA by (i) the difference between exchangerate at the time of conversion and (ii) the purchase price when VNA bought the joint venture is lower than par value.

3 AITS hasn’t changed the business registration certificate in accordance with its contribution capital


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Registered

share capital

Contributed

share capital

Registered

capital of

Vietnam

Airlines

Contributed

capital of

Vietnam Airlines

Vietnam

Airlines’

ownership

Main lines of

business

Co., LTD (TECS) District – Ho Chi Minh

City

services

Noibai Airport Services

Joint-Stock Company

(NASCO)


Airport – Phu Minh

Commune - Soc Son


Million

VND83,157,6 83,157,6 42,411,6 42,411,6 51%

Air

transportation

support

services

Aviation labor supply and

import – export joint stock

company (ALSIMEXCO)

No. 1 Lane 200/10

Nguyen Son – Bo DeWard – Long Bien


MillionVND

10.000 10.000 5.100 5.100 51%

Aviation Labor

import-exportand tourism

service

Aviation Printing Joint

Stock Company

(AVIPRINT)

200 Nguyen Son – Bo

De Ward – Long Bien


Million

VND21.419,2 21.419,2 10.924,2 10.924,2 51%

Printing and

packaging

services


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WORKFORCE

Workforce structure

As at the date of public disclosure of the company valuation result (14/05/2014), our totalnumber of regular staffs and employees are 10,180. The number of our employee staying with us after

equitization will be 10,180.

The following tables sets forth information regarding our workforce composition on May 14,2014.

By gender By age

Male . . . . . . . . . . . . . . . . . 5,528 Under 30 . . . . . . . . . . . . . 3,541Female . . . . . . . . . . . . . . . 4,652 From 31 to 40 . . . . . . . . . 3,956

From 41 to 50 . . . . . . . . . 1,792From 51 to 55 . . . . . . . . . 630From 56 to 60 . . . . . . . . . 261

By education By department

PhD . . . . . . . . . . . . . . . . . . 23 Advisory & Strategy . . . . 602Masters . . . . . . . . . . . . . . . 473 Flight operation . . . . . . . . 3,201Undergraduate . . . . . . . . . 4,252 Sales and Marketing . . . . 1,780College . . . . . . . . . . . . . . . 857 Services . . . . . . . . . . . . . . 4,128Polytechnique . . . . . . . . . 913 Technical . . . . . . . . . . . . . 128Vocational workers . . . . . 2,850 Others . . . . . . . . . . . . . . . . 341Technicians . . . . . . . . . . . 433Untrained . . . . . . . . . . . . . 379

Workforce evaluation

Our workforce has grown significantly in terms of quantity and quality in order to meet business

requirements. Besides the fleet and equiment renovation program, we have been placing special focuson recruitment and training, particularly for those require dinstictive skill set in our operation such as pilot, flight attendant, engineer and aircraft technician.We plan to gradually reduce the number of

foreign professionals requiring high compensation and benefits package.

Our workforce is young on average. 75.9% of our team are under 45 years old, of which

employees under 30 years old account for nearly 40%. The proportion of graduate and postgraduateemployees accounts for 45.8%. Specialized aviation staff (pilot, technical staff, and cabin attendant)accounting for the majority (60%) of our workforce.

With the goal of becoming a four-star airline by 2015 – 2016 and one of the premium air

transportation service providers in South East Asia by 2020, we aim to provide a comprehensive

training to our managers for them to excel and improve the working environment of our staff throughour standardizing of job titles and further extending employees’ skill set through workshops and

seminars. By applying the lastest practices in human resources management, we are now makingtransformative progress in increasing employee’s engagement, especially among our managers, flightoperators and technicians. Diversifying our recruitment channels has now resulted in a team of pilots

with 600 Vietnamese, meeting more than 69.8% of our operating requirement.

Our productivity as measured by ASK per employee increased by 10% on yearly basis. Compared to

other carriers in SkyTeam and Oneworld alliances, this is an above-average level of productivity,

comparable to China Southern Airlines, Korean Air, and American Airlines.


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VALUATION RESULTS

Enterprise valuation results as at 31/3/2013

Pursuant to Decision No. 1807/QĐ-BGTVT issued by Ministry of Transport dated 14th May2014 on the results of Vietnam Airlines enterprise valuation for equitization:

Using the book-value method as at 31st March, 2013 (after accounting adjustment based onrecommendation from the State Audit of Vietnam):

As of 31st March, 2013, we are valued at 57,156,505,406,732 VND (Fifty seven thousands onehundred and fifty six billion, five hundred and five million, four hundred and six thousands, sevenhundred and thirty two VND), equivalent to 2,744 million USD (Two thousands, seven hundred and

forty four million US dollars).

The contribution capital from the State in the enterprise: 10,576,378,635,374 VND (Tenthousand and five hundred and seventy six billion, three hundred and seventy eight million, sixhundred and thirty five thousands, three hundred and seventy four VND), equivalent to 507.79

million USD (Five hundred and seven point seven nine million US dollars).

Using the valuation result done by Morgan Stanley & Co. International PLC and Citigroup

Global Markets Asia Limited:

As of 31st December, 2013, for the purpose of equitization we are valued at 57,047,892,000,000VND (Fifty seven thousand and forty seven billion, eight hundred and ninty two million dong),

equivalent to 2,739 million USD (Two thousands, seven hundred and thirty nine million US dollars).The contribution capital from the State in the enterprise: 23,493,984,000,000 VND (Twenty threethousand four hundread and ninety three billion, nine hundred and eighty four million dong),

equivalent to 1,128 million USD (One thousand, one hundred and twenty eight million US dollars).

Additionally, Decision No. 1807/QĐ-BGTVT dated 14th May 2014 specified that the ParentCompany – Vietnam Airlines will not adjust VNA’s accounting books according to the results of

enterprise valuation.

Assets not accounted for in the valuation

Amount of assets not accounted in the equitization book value at 31st March, 2013 was44,594,399,211 VND (in which Parent Company – Vietnam Airlines was 38,040,106,205 VND;

VAECO was 101,159,281,058 VND and VINAPCO was 5,395,011,948 VND), including:

Unused assets: 135,630,757,258 VND;

To be liquidated assets: 8,963,641,953 VND;

Asset formed by the Bonus and Welfare reserve: 0 VND.Vietnam Airlines is responsible for handing over the unused assets and to be liquidated assets to

the DATC (Debt &Asset Trading Corporation) while ensuring no loss of State’s properties occursduring the transfer.

Resolved issues following the recomendation of the State Audit of Vietnam

Following the recommendation of the State Audit in the Assessment Report on the Valuationresults, we have completed the followings:

Working with the Civil Aviation Administration of Vietnam/Local airport authorities to

obtain the official confirmation for the form of land use in airports: the Civil Aviation

Administration of Vietnam issued Decision No. 447/QĐ-CHK dated March 14, 2014approving the land use plan of Vietnam Airlines in domestic airports.


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Completing the relevant steps to obtain the confirmation regarding the land use plan outside

the airports of VINAPCO: Vietnam Airlines and VINAPCO have sent the Land Use Plan tothe local People’s Committees of Hanoi, Ho Chi Minh, Da Nang and Khanh Hoa, of whichall have sent the confirmation on the current situation and the Land Use Plan.

Issues to be resolved

We will continue to resolve necessary legal requirements regarding property rights in accordancewith the current regulations regarding our equitization process. Up to now, we have strictly

followed the recommendations of the State Audit of Vietnam on issues related to land use rights. Wehave essentially resolved the legal procedures on the following cases:

Regarding the 03 expired land use rights. These would continue to be leased to our company asspecified in Decisions No. 4655/QD-UBND, 4659/QD-UBND and 4658 /QD-UBND dated

September 9, 2014 issued by the Hanoi People’s Committee.

Regarding the land use rights without official certificates. The certificates have officially beenissued by the Gia Lai People’s Committee to Vietnam Airlines. Regarding the 04 plots in the airports

without land use right contracts: We have sent the required document to the Civil Aviation

Administration to initiate the signing of the land lease contracts. The Administration has aggreed withthe plan and allowed us to complete the necessary procedures.

Regarding the 09 plots outside the airports without legal documents. The Hanoi People’sCommittee issued Decisions No. 4654-4661/QD-PPC on September 9th 2014 permitting us to lease

08 plots of land (the remaining plot of 1.78 ha would be returned to Hanoi People’s Committee).

We are to verify and certify receivable and payable accounts which are not yet verified till the

date of official conversion to a joint stock company (not including receivable and payable accountswhich must be verified according to the technical specification in the application of Dispatch

No.2903/VPCP-DMNN dated April 12, 2013). Currently, we have completed the verification exceptfor the bad debts under the accounts of Indochina Airlnes, Aviation Hotel JSC and Aviation High

grade Plastic JSC.

We are to direct VINAPCO to continue to settle the damage caused after the incident at Lien

Chieu warehouse (Da Nang), and resolve the financial issues related to the case. The ruling of the first

trial on Febuary 27, 2014 by the People’s Court of Hanoi was that PJICO was to pay a compensationof 68,425,766,400 VND to VINAPCO. However, PJICO did not agree with this ruling and decided to

appeal. There has not been a final decision from the appellate court.

We are to direct VINAPCO to transfer the ground gasoline distribution system to Petro VietnamOil (PVOil) according to the guidelines from the Ministry of Finance, and report to the relevantauthority in the case that our company value is affected by the transfer. On June 26, 2014, VINAPCO

has completed transferring the assets to PVOil on 12am, July 1, 2014 .

The following tables set forth the details regarding the transferred assets: Book value ofthe transferred assets on VINAPCO’s financial statements.

Fixed assets

In VND, as at 30/06/2014

Assets Historical cost Net Book Value

Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,009,237,337 6,478,155,201

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,723,598,183 1,987,084,738

Equipments and machineries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,717,101,632 4,255,177,144

Transport vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,097,130,357 –

Office equipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,256,718 7,289,831Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268,150,447 228,603,488

Intangible fixed assets (land use right). . . . . . . . . . . . . . . . . . . . . . . . 3,544,889,629 1,949,956,558


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Current assets

In VND, as at 30/06/2014

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,836,683,701 VND

Trading tools & Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Historical cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,424,244,433 VND

Net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,139,984 VND

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,504,784,497 VND

Bad debts provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,705,608,441 VND

Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 995,495,390 VND

Fuel Price Stability Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Opening balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,841,128,453) VND

Closing balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,307,871,124) VND

Source: VINAPCO

Workforce

The number of employees transferred to PVOil is 155 employees, including 31 transferred to

Middle Region Petro Unit and 124 transferred to Northern Region Petro Unit.

Land

The following table sets forth the details regarding the lands transferred to PVOil fromVINAPCO

Area

(m2)

Viet Tri Petrol warehouse – Ben Got ward, Viet Tri city, Phu Tho . . . . . . . . . . . . . . . . . . . . . 11,426.5

Head office of Northern Aviation Trading Services Unit, - Mai Lam commune, Dong

Anh, Hanoi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,080

Ho Sen Petrol station – Nguyen Son, Long Bien, Hanoi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464

Mai Lam Petrol station – Mai Lam commune, Dong Anh,– Hanoi . . . . . . . . . . . . . . . . . . . . . 2,939.5

Phu Lo Petrol Station – Phu Lo commune, Soc Son, Hanoi . . . . . . . . . . . . . . . . . . . . . . . . . . 1,482

Hai An Petrol station – An Hung commune, An Hai, Hai Phong . . . . . . . . . . . . . . . . . . . . . . 7,267.7

Viet Tri Petrol Station – Thanh Mieu ward, Viet Tri city, Phu Tho . . . . . . . . . . . . . . . . . . . . 2,910

Tan Thinh Petrol station – Tan Thinh ward, Thai Nguyen city . . . . . . . . . . . . . . . . . . . . . . . . 750

Vinh Yen Petrol station – Khai Quang commune, Vinh Yen, Vinh Phuc . . . . . . . . . . . . . . . . 2,480

My Thuan Petrol station – My Thuan commune, My Loc district, Nam Dinh . . . . . . . . . . . . 3,030

Ninh Binh Petrol station – Nam Thanh ward, Ninh Binh city . . . . . . . . . . . . . . . . . . . . . . . . .1,944

Quang Nam Petrol station –Tam Dan, Tam Ky city, Quang Nam . . . . . . . . . . . . . . . . . . . . . . 3,025

Dien Ngoc Petrol Station – Dien Ngoc Industrial Park, Quang Nam . . . . . . . . . . . . . . . . . . . 1,904

Phu Yen Petrol Station – Tuy Hoa town, Phu Yen province . . . . . . . . . . . . . . . . . . . . . . . . . . 750

Da Nang Petrol Station – 154 Cach Mang Thang 8 street, Khue Trung, Cam Le, Da Nang . 688.7


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PRINCIPAL ASSETS OF OUR BUSINESS

Our network

Our network is our most valuable intangible asset. We are currently operating a high frequency,hub and spoke network, connecting the gateway airports in Hanoi and Ho Chi Minh City. Our

objectives regarding route development strategy are as follows:

Domestic and CLMV network (Cambodia, Laos, Myanmar) is crucial to our competitiveadvantage and will be extensively developed;

Northeast Asia route is our core network due to its significant contribution to our profitability;

Transcontinental routes remain within our long-term strategy, which will be carefully

researched and developed.

To meet the growing demand of national economic development, our domestic route network has been rapidly developed and organized based on the model of hub and spoke, covering the whole

regions, coinciding with Vietnam’s transportation planning and tourism development. We added 11routes and increased frequency in our domestic network during 2008 – 2013. The trunk routes areoperated with a high frequency throughout the day. The tourism routes connect popular attractions

such as Da Nang, Hue, Nha Trang, Phu Quoc, Da Lat and Con Dao have been enhanced in capacity,

satisfying the rising demand of traveling during the holiday season. Addtionally, the local routesconnecting Haiphong, Vinh, Quang Binh, Quy Nhon, Can Tho, Tay Nguyen with other economiccentre in Vietnam will continue to be maintained and structured to suit the demand to promote trade

and tourism.

Our international network has been expanding rapidly to meet the demand of development andeconomic - political - social exchange between countries, enhancing our regional competitiveness

and maintaining our market position as the flag carrier of Vietnam. Regarding European network, we

mainly have been servicing destinations including Paris, Frankfurt, Moscow, and London. Regarding Northeast Asia network, we have been constantly improving our offerings, increasing the frequencyfrom Hanoi/Saigon/Danang to the main cities of Japan, South Korea, China, Taiwan ... to meet the

growing demand from these potential markets. Regarding network in Southeast Asia, we havecontinuously been expanding in order to assert our position as the leading carrier in the region and

making Vietnam as a gateway hub in Southeast Asia, connecting to other international financial and

social centers. Specifically, from 36 international routes and 27 domestic routes in 2008, by the end of2013, we have extended our network to 52 international routes to 29 destinations in 17 countries, 39domestic routes to 21 domestic destinations.

The following table sets out information regarding our route expansion for the period 2008 –

2013.

For the year ended December 31,

2008 2009 2010 2011 2012 2013

Domestic Number of Route . . . . . . . . . . . . . . . . . . 27 31 35 37 38 39 Number of Destination . . . . . . . . . . . . . 19 20 20 20 20 21

International Number of Route . . . . . . . . . . . . . . . . . . 36 36 43 46 47 52

Number of Destinations . . . . . . . . . . . . . 24 24 26 27 28 29

Number of Countries . . . . . . . . . . . . . . . 14 14 15 16 17 17

The following table shows information regarding our international route network as of June 30,

2014

Route Frequency (per week) Destinations


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Route Frequency (per week) Destinations

CLMV Sub-region

8 81 5 Destinations

6 73Vientiane, Luang Prabang (Laos)

Phnom Penh, Siem Reap (Cambodia)

2 8 Rangoon (Myanmar)

Northeast Asia

17 128 8 Destinations

4 32 Cao Hung, Taipei (Taiwan)

8 47Tokyo, Osaka, Fukuoka, Nagoya

(Japan)

5 49 Seoul, Pusan (Korea)

Southeast Asia 7 99-1024 destinations: Thailand, Singapore,

Malaysia, Indonesia

Australia 2 14 2 destinations: Sydney, Melbourne

China 10 57

6 destinations: Hong Kong, Shanghai,

Beijing, Guangzhou, Chengdu, Hangzhou

(China)

Europe9

29-30 4 Destinations:10 Paris (France)

8 Frankfurt (Germany)

7-8 Moscow (Russia)

4 London (United Kingdom)

TOTAL 53 29

Besides the current operating routes, we have continuously expanded the scope of business in

various forms of cooperation through interlines, Special Prorate Agreement (SPA), and codeshare

partnerships. By doing so, we have been able to expand our network, thereby expanding ourdestinations and developing our sales channel, diversifing our products, improving our international

brand awareness. By the end of 2013, we have codeshare partnership with 20 airlines and and theFrench National Railway Company; SPA with 80 airlines and Deutsche Bahn – a German railwaycompany. Through codeshare partnership, our total number of destinations increases by 66 cities,

including 9 Asian cities, 6 Middle East cities, 19 American cities, 31 European cities and 1 African

city.

Sales & distribution network

Air transport is our main business and therefore constitutes our main revenue source. Airtransport operation consists of passenger and cargo operations, air charter services, and other technicaland economic services (aerial photography, geological surveys, etc) performed by Vietnam Air

Services Company (VASCO) - a dependent unit of Vietnam Airlines. In the period of 2008-2013,transportation revenue accounted for 96,9% of total revenues.

We have focused on our distribution system and sales network development to boost revenues

and to penetrate new market segment. Our sales channels consist of: (i) direct sales at Vietnam

Airlines offices and international branches; (ii) indirect sales through Passenger Sales Agents andGeneral Sales Agents (PSA and GSA) designated by Vietnam Airlines, or via the BSP agents and touroperators.

Our international sales channels cover extensively Asia, Europe, Australia and North America.

At December 31, 2013, we had 32 representative offices in 20 countries and regions, 14 GSAs, joined

BSP/ARC systems of 38 countries for ticket sales and distribution..

In the domestic sales network, we had 03 regional offices in the North, Middle and South locatedin Ha Noi, Da Nang and Ho Chi Minh City. The regional offices are responsible for ticket sales,

distribution and promotion to approximately 200 domestic agents.


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In line with the rapid development of e-commerce, we had invested in our online ticketing

system to directly reach out to customers and reduce our selling expenses. Currently, revenue fromonline sales accounted for approximately 6.3% of our total revenue. E-tickets have been deployedsince 2008 across our distribution network. We have signed contracts of selling e-tickets with 90

airlines, including SPA cooperation with 80 airlines.

Our substantial sales agent network is our most important distribution channel, which contributes

approximately 90% our ticket revenue. Through those agents, we can access an internationalcustomerbase.

Fixed assets

We are a leading air service provider in Vietnam with large base of worldwide offices,subsidiaries and dependent units. We operate a considerable and diverse fixed assets base, and

because of our business nature, assets such as aircraft, land use rights, management system,warehouses, electronic equipments, ground transportation vehicles play a crucial role in sustainabilityand development of our company. At the time of March 31, 2013, our total assets value according to

net book value was 57,194 billion VND, in which our fleets constitutes 32,693 billion VND,accounting for 57% of total assets.

The following tables set out our long-term asset value as of the date of valuation and by the endof fiscal year 2013.

As at March 31, 2013

In million VND

Assets Historical cost

Depreciation &

Amortization Residual value

Tangible fixed assets . . . . . . . . . . 9,749,504 3,803,732 5,945,772

Owned aircraft . . . . . . . . . . . . 7,832,195 2,717,860 5,114,335

Plants and Buildings . . . . . . . 271,752 98,936 172,816

Equipment and machinery . . 484,928 215,419 269,509

Vehicles . . . . . . . . . . . . . . . . . 742,653 510,644 232,009Tools and other fixed assets . 417,976 260,873 157,103

Leased fixed assets . . . . . . . . . . . 38,798,707 11,222,085 27,576,622

Intangibles . . . . . . . . . . . . . . . . . . 371,683 140,561 231,122

Land use right . . . . . . . . . . . . 58,818 309 58,509

Other intangible fixed assets . 312,865 140,252 172,613

Total . . . . . . . . . . . . . . . . 48,919,894 15,166,378 33,753,516

Source: Audited FS Vietnam Airlines at 31/03/2013 following Dispatch No.103/KTNN-TH issued by

State Audit of Vietnam on 25/01/2014

For the fiscal year ended December 31, 2013

In million VND


Depreciation &


Tangible fixed assets . . . . . . . . . . 11,160,908 4,286,970 6,873,938

Owned aircraft . . . . . . . . . . . . 9,343,240 3,207,173 6,136,067

Plants and Buildings . . . . . . . 285,009 109,132 175,877

Equipment and machinery . . 430,923 202,268 228,655

Vehicles . . . . . . . . . . . . . . . . . 855,143 609,808 245,335

Tools and other fixed assets . 246,593 158,589 88,004

Leased fixed assets . . . . . . . . . . . 41,513,874 13,278,243 28,235,631

Intangible fixed assets . . . . . . . . . 391,017 187,301 203,716Land use right . . . . . . . . . . . . 57,054 - 57,054

Other intangible fixed assets . 333,963 187,301 146,662


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For the fiscal year ended December 31, 2013

In million VND


Depreciation &


Total . . . . . . . . . . . . . . . . 53,065,799 17,752,514 35,313,285

Source: Audited Financial Statement Vietnam Airlines at 31/12/2013.

Fleet

We have 821 aircrafts with an average age of 4.62 as at March 31, 2013. The following table sets

forth our details regarding our fleet structure, fleet financing and fleet age at the time.

Ownership

and finance

lease

Operating

lease Total

Average fleet

age in year

Boeing 777 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6 10 8.91

Airbus A330 . . . . . . . . . . . . . . . . . . . . . . . . . . 9 9 7.68

Airbus A321 . . . . . . . . . . . . . . . . . . . . . . . . . . 28 16 44

1

2.8Airbus 3202 . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 5.42

ATR 72 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5 14 5.42

Fokker F703 . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 39 82 4.62

1 Not including 03 aircraft leased to K6;2 We have retired all of our A320s since 2013;3 We have retired all of our F70s since May, 2014.

We had 83 aircrafts with an average age of 5.34 for the year ended December 31. 2013. Thefollowing table sets forth our details regarding our fleet structure, fleet financing and fleet age at the

time:

Ownership

and finance

lease

Operating

lease Total

Average fleet

age (year)

Boeing 777 . . . . . . . . . . . . . . . . . . . . . . . 4 6 10 9.67

Airbus A330 . . . . . . . . . . . . . . . . . . . . . . 9 9 8.43

Airbus A321 . . . . . . . . . . . . . . . . . . . . . . 31 17 48 3.28

Airbus 3202 . . . . . . . . . . . . . . . . . . . . . .

ATR 72 . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5 14 6.17

Fokker F70 . . . . . . . . . . . . . . . . . . . . . . . 2 2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 46 37 83 5.34

The following table sets out our historical fleet development by aircraft types and method of

funding from 2009 to 2013.

For the year ended December 31,

Financing 2009 2010 2011 2012 2013

280-300 seats 17 20 21 19 19

B777. . . . Finance lease 4 4 4 4 4

B777. . . . Operating lease 6 6 6 6 6A330 . . . Operating lease 7 10 11 9 9

150-180 seats 27 32 39 45 48

A321 . . . Purchase 2 2 1 1 3A321 . . . Finance lease 12 13 21 26 28A321 . . . Operating lease 3 7 7 13 17


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A320 . . . Operating lease 10 10 10 570 seats 13 16 16 16 16

AT7 . . . . Purchase 4 3 3 3 3AT7 . . . . Finance lease 5 6 6 6 6

AT7 . . . . Operating lease 2 5 5 5 5F70 . . . . . Purchase 2 2 2 2 2

Total 57 68 76 80 83

Other tangible assets

Plants and Buildings: including headquarter, offices, factories, training centers,warehouses….

Equipment and machinery: including automated queuing system, air-powered aircraft

pressure washers, flight training devices, ground power units (GPU), fire alarm systems, portable water supply, computer networks, air conditioning units (ACU), and elevators…

Other vehicles: In addition to aircraft and aircraft engines, other vehicles include cars,trucks, dolly, high loader, push-back vehicles, and lavatory trucks for the purpose of ground

handling services for passenger and cargo.Land

We were using 991.446,3 m2 and 946,195.3 m2 of land at the date of company valuation (March

31, 2013) and at December 31, 2013 respectively with the following structure:

31/03/2013 31/12/2013

Area (m2) (%) Area (m2) (%)

Land use right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246.118,00 24.8 224.500,50 23.4

Land allocated with the collection of land use levy 15.447,30 1.6 14.758,60 1.5

Land allocated without the collection of land use levy

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

209.741,90 21.1 209.741,90 21.9

Lease land with annual rental payment . . . . . . . . . . 766.277,10 77.3 733.043,80 76.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 991.466,30 100 957.544,30 100

Vietnam Airlines land usage

At 31/3/2013, Vietnam Airlines has 37 land plots of 301,902.3 m2, classified as follows:

Land by the State with the collection of long-term usage fees: 07 plots (8,456 m2) outsidedomestic airports.

Leased land with annual rental payment: 30 plots with total areas of 293,446.3m2, of which

75,336.3m2 (5 plots) are inside domestic airports and 218,110 m2 (25 plots) are outsidedomestic airports.

As at December 31, 2013, we had returned 02 plots outside the airport to Ho Chi Minh city (totalarea of 2,822.2 m2) in accordance with the approved Land Usage Plan. We have been using the

allocated land according to the official planning in which Vietnam Airlines’ land use rights mostly are

long-term leases with annual rental payment. The remaining land use rights are purchased ortransferred from the Government to the company

Land use classification of VINAPCO

On March 31, 2013, VINAPCO has 36 land plots of 293,990.45 m2, in which:

Lands which will not be in use after the equitization:


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Lands allocated for the Noi Bai International Airport Project and lands used for

VINAPCO’s commercial fuel business operation: 16 plots were transferred to PVOil withthe total area of 42,561.7 m2 under the contract signed on June 16, 2014.

VINAPCO continues using 20 plots with the total area of 251,428.75 m2, classified as follows:

- Government’s properties: 03 plots with the total area of 6,302.6m2

- Leased land with annual payment: 17 plots with the total area of 245,126.15m2, in

which:

- Land inside domestic airports: 135,992.0m2 (10 plots);

- Land outside domestic airports: 109,134.2m2 (7 plots).

Land use classification of VAECO

As of March 31,2013, VAECO has 05 land plots of 395,573.5 m2, which it will continue to

manage and all of which are within the area of domestic airports, classified as follows:

Land allocated by the State without any fee: 02 plots with the total area of 209,741.9 m2

Leased land with annual payment: 03 plots with the total area of 185,831.6 m2

Detailed information about the land managed by Vietnam Airlines is provided in Appendix 02.


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PART IV. BUSINESS

OUR BUSINESS PRIOR TO EQUITIZATION

Parent company operational performance

Revenues structure

With our core business being air transportation, our revenue drivers come from our passenger,cargo and air charter operations, both directly and indirectly through our dependent unit – VASCO

(Vietnam Air Service Company). The remainder of our revenue structure stems from ancillaryrevenues.

As previously mentioned, we earn a substantial majority of our revenue from air transport(96%of total revenue, 2008 – 2013 average). This can be further subdivided into passenger and cargo

operations. Revenue from passenger operations makes up 89.7% of air transport revenues–(surchargefrom fuel, insurance and refund fees already included) and 86.4% of total revenues in the same period.Our cargo operation contributes 8,9% to total air transport revenues and 8.6% to total revenues.

During 2008 – 2013, our revenue grew by 19.7%/year, of which air transportation and ancilliaryrevenues growth were 19.9% and 20.1%, respectively. The economic downturn has created a

significant decrease in global transport demand, and subsequently caused a reduction of 8.2% in our2009 total revenues. Further impacts could be seen in our international passengers segment, which

saw revenue went down by 8% compared to 2008. Domestic fuel surcharge, which was 200 billionVND in 2008, no longer contributed to total revenues in 2009. During the following years, we saw asubstantial rebound in total revenues, especially in 2010 and 2011, when growth were 53.5% and 26%

respectively. This results reflected three major changes in our operating environment:

An improved economic environment which boosted international and domestic passenger

volumes (30% and 33%, in 2010)

Adjusted domestic sale price ceiling by the Ministry of Finance (an increase of 20% fromApril, 2011)

We seized the opportunity of the economic recovery to inaugurate 07 new international and

03 new domestic routes in 2010.

In 2013, revenue growth was 6%, lower than the average in the previous year. Weaker JPY,AUD, KRW – currencies that we have major exposure to – and intense competition on European

routes by South East Asia and European airlines affected our average yield on international routes.

Despite this slow down, revenue in 2013 is still twice the size of what it was back in 2008 – 2009during the economic downturn.

In million VNDYear ended December 31,

2008 2009 2010 2011 2012 2013

Total revenues . . . . 25,277,008 23,202,718 35,604,454 44,874,845 49,577,019 52,828,835

Air transportation 23,979,934 21,922,250 33,943,447 43,234,000 48,453,993 51,366,955

Passenger . . . 21,974,817 20,037,708 30,499,337 38,623,615 43,064,227 45,407,388

Cargo . . . . . . . 2,200,578 1,764,709 3,142,849 4,000,781 4,380,574 4,376,687

Air charter . . . 95,391 119,833 301,261 346,598 521,18 924,309

Others . . . . . . -290,852 488,012 658,571

Ancillary revenues 1,297,074 1,280,468 1,661,007 1,640,845 1,123,026 1,461,880

Technical &

Commercialsupport . . . . . . 568,859 538,512 599,022 687,008 720,212 775,221

Commission . 61,436 44,926 55,019 47,205 50,136 39,928


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Source: Vietnam Airlines Audited Financial Statement, 2008 – 2013. Passenger and Cargo revenuehas already included refund, and fuel surcharge.

Air Transportation

Passenger operations. With respect to our passenger traffic, we flew a total of 72,8 million passengers in total during 2008 – 2013, 63% of which was domestic and 37% international. Passenger

traffic growth was 10.9%/year, with a domestic growth rate of 10.8%/year and 11.2%/year forinternational. We flew 15 million passengers in 2013, or 1.7 times that of 2008.

Our operating capacity, as measured by ASK, grew by 10.3%/year on average in the same

period, of which domestic growth was 10.7% and international growth was 10.2%. Our capacity was

31,648 million seat kilometers, of which domestic was 8,604 million seat kilometer and internationalwas 23.044 million seat kilometer during the year ended December 31, 2013.

Total, domestic and international RPK increased by 11.1%, 10.2% and 11.5%, respectively. 2013RPK was 25.098 passenger.kilometer, an increase of 70% compared to 2008.

Load factor in 2008 – 2013 was 81% for domestic routes, 74% for international routes, and 76%

in total. Most notably, 2013 international load factor was 78.7%, the highest figure we have obtainedso far.

In 2013, total passenger volume of Vietnam was 28.95 million of which Vietnam Airlines flew15 million or 51.8% of the market, 9 million of which was domestic and 6 million was international.

The following table sets forth our ASK, RPK, load factor, passenger volume and market sharefor our domestic and international passenger operations for the periods indicated:

Year ended December 31,

2008 2009 2010 2011 2012 2013

RPK

Domestic . . . . . 4,283 4,984 6,428 6,906 6,423 6,969

International. . . 10,520 9,671 12,742 14,185 16,269 18,129

Total . . . . . . 14,803 14,655 19,169 21,091 22,692 25,098

ASK

Domestic . . . . . 5,181 6,165 7,974 8,542 8,154 8,604

International. . . 14,202 13,881 17,053 20,014 21,586 23,044

Total . . . . . . 19,383 20,046 25,026 28,556 29,740 31,648

Load factor

Domestic . . . . . 82.7% 80.8% 80.6% 80.8% 78.8% 81.0%

International. . . 74.1% 69.7% 74.7% 70.9% 75,4% 78.7%Total . . . . . . 76.4% 73.1% 76.6% 73.9% 76.3% 79.3%

Passenger volume

(million)

Domestic . . . . . 5.4 6.3 8.1 8.9 8.3 9.0

International. . . 3.5 3.1 4.2 4.8 5.3 6.0

Total . . . . . . 8.9 9.4 12.3 13.6 13.6 15.0

Market share

Domestic . . . . . 78.7% 74.1% 79.1% 75.5% 70.6% 63.2%

International. . . 38.1% 35.0% 39.1% 40.1% 39.9% 40.6%

Total . . . . . . 55.6% 54.0% 58.5% 57.7% 54.4% 51.8%

Cargo operation. Total Revenue Tonne Kilomters during 2008-2013 was over 998 thousand

tons, of which 600 thousand was domestic and 400 thousand was international. Total amount of cargo

transported in 2013 was approximately 184 thousand tons, 144% that of 2008. Cargo transportgrowth, as measured by RTK, during 2008 – 2013 was 7.6%/year, of which domestic was 4.8% and

international was 11.2%.

Unused ticket

&Asset leasing 434,344 350,024 419,535 484,989 168,249 441,965

Others . . . . . . . . . 232,435 347,006 587,431 421,643 184,429 204,766

Deductible revenue -84,708 -141,814 -262,584 -347,161 -434,895 -368,775

Net revenue 25,192,300 23,060,904 35,341,870 44,527,684 49,142,124 52,460,060


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Available Tonne Kilometers growth during 2008 – 2013 was 12%/year, 5.6% for domestic and

14% international. Total RTK reached 522,074 thousand tonne kilometers, and load factor increased by 4% to 65.5% in 2012.

We have an overwhelming comptetitive advantage in the domestic cargo transportation market,with a 5 year average market share of 90%. As for the international market, we hold a market share of

17% in 2013.

Year ended December 31,

2008 2009 2010 2011 2012 2013

RTK

Domestic . . . . . 76,704 85,462 109,899 112,806 115,715 100,784

International . . . 219,283 207,509 305,719 299,219 363,908 421,290

Total . . . . . . 295,987 292,971 415,618 412,025 479,623 522,074

ATK

Domestic . . . . . 154,768 190,858 255,829 260,519 204,123 177,499

International . . . 393,041 370,621 473,933 586,162 605,260 619,575

Total . . . . . . 547,809 561,479 729,762 846,681 809,383 797,074

Load

factor

Domestic . . . . . 49.56% 44.78% 42.96% 43.30% 56.69% 56.78%

International . . . 55.79% 55.99% 64.51% 51.05% 60.12% 68.00%

Total . . . . . . 54.03% 52.18% 56.95% 48.66% 59.26% 65.50%Cargo

Volume

(Tonne)

Domestic . . . . . 77,403 87,310 112,707 119,072 102,260 97,726

International . . . 51,008 44,615 68,537 71,813 79,983 86,880

Total . . . . . . 128,411 131,925 181,244 190,885 182,243 184,606

Market

share

Domestic . . . . . 88% 84% 91% 92% 91% 75%

International . . . 20% 18% 21% 21% 19% 17%

Total . . . . . . 37% 38% 40% 40% 34% 29%

Air charter 4. In addition to our transport operation, we also promote our charter flight service line

in recent years. There was 3,513 charter flights during 2008 – 2013, of which 89 were domestic and3,424 were international. Charter flight operation generates 87.8 million USD in total from 2008 to

2013, most of which was from international flight (98%).

Ancilliary revenues. Our ancilliary revenues of incidental revenues in ticket refund and

cancellation, , revenues from support activities from our three ground handling services enerprises andother activities. While being only a minor part of our revenue base, this is an important business

activity in our integrated supply chain. Ancilliary revenues grew by 20.1%/year during the last 5

years. In 2013, ancillary revenues was 1,461 billion VND, up 12.7% compared to 2008.

Cost structure

Our Total cost/Total revenue ratio is 99.5% on average during 2008 – 2013. Total operating costin the same period is 40,210 billion VND/year, with an average growth rate of 16.6%/year, lower thanthat of net revenue (19.7%/year). Major changes in Vietnam Airlines cost structure are as follows:

Raw material is down from 43% to 38%

Financial expenses is down from 10.1% to 4.7%

Outsourced service is up from 33% to 43%

Overall, there was a shift from raw material,

VNA IPO-Prospectus ENG 26Sept14-Final

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