VietJetAir raises 95 million to fund ambitious travel expansion

VietJetAir raises 95 million to fund ambitious travel expansion - Accelerating Fleet Growth and Ambitious Route Expansion

Look, when we talk about growth, you have to appreciate the sheer audacity of VietJet’s fleet strategy; honestly, their order book is just wild. At the 2025 Paris Air Show, they dropped a monumental commitment: a firm order for 100 A321neos, plus options for another 50 jets—that’s the biggest commercial aviation deal of the year, period. Think about it this way: this immediately catapulted them into the top ten airlines worldwide for scale of aircraft orders, putting them third globally for narrow-body commitments, ahead of almost every European low-cost carrier except Ryanair. And they chose the A321neo variant using the CFM LEAP-1A engine, which isn't just a detail; it's a strategic move because it cuts fuel consumption by a certified 15% per seat kilometer, efficiency that is crucial for minimizing the environmental footprint as they stretch their legs onto new, longer international routes. We’re seeing an accelerated delivery schedule here, clearly aimed at dominating the lucrative medium-haul routes into the "Golden Triangle," specifically hitting those high-yield sectors like Hanoi and Ho Chi Minh City connecting to Tokyo, Seoul, and emerging hubs in Western India. But how do you pay for all that metal? Well, about 60% of these incoming Airbus jets are cleverly financed using complex Japanese Operating Lease with Call Option (JOLCO) structures, which keeps those massive multi-billion-dollar liabilities conveniently off the primary balance sheet for now. To keep those new LEAP engines flying, they’ve already poured $25 million into expanding their MRO facility near Cam Ranh, incorporating Southeast Asia's first specialized bay for composite fan blade inspections. It’s a dense operation, too: they specified a 230-passenger, single-class configuration, maximizing revenue per flight, though that dense layout did require specialized regulatory sign-off for mandatory rapid evacuation protocols. Ultimately, full integration of those 100 new planes is projected to hike VietJet's total Available Seat Kilometers (ASKs) by a stunning 45% by the close of 2028—that aggressive target should really intensify the competitive pressure on every flag carrier currently operating across Asia.

VietJetAir raises 95 million to fund ambitious travel expansion - The Mechanics of the Offering: 25,000 Bonds Issued to Investors

Okay, so we know they needed cash for those planes, but how they actually structured this $95 million bond offering—that’s where the real engineering is, and honestly, it’s far more complex than a simple loan. Look, they didn't just sell the 25,000 VJ-S2025 bonds; they embedded a smart incentive: a semi-annual step-up coupon starting at a modest 5.85% for the first three years, which then jumps sharply to 7.15% afterward. That step-up is key, right? It’s designed specifically to keep stable, long-term institutional holders—like the two Japanese pension funds and the Singaporean sovereign wealth fund that snapped up over 85% of the offering—comfortable. And this wasn't just unsecured paper; these are secured bonds, collateralized precisely against the future ticket sales—the cash flow—from 12 specific, high-yield routes connecting Vietnam with Seoul and various Japanese cities. The stated maturity is seven years, due in January 2033, but here’s a sharp-edged detail I really appreciate: the airline gave itself an out, including an issuer call option after year five. But it’s not free; they can only exercise that call if their audited Debt-to-EBITDA ratio improves significantly, dropping below 2.5x for two consecutive quarters. If you look at the financials, the effective Yield-to-Maturity (YTM) shook out at 6.62% at issuance, a figure that placed it 180 basis points above the prevailing Vietnamese government bond rate. Crucially, the prospectus wasn't vague about spending the $95 million either. A hefty 70% of it, exactly $66.5 million, is contractually locked down for Pre-Delivery Payments (PDPs) on the new Airbus fleet. The other 30% is earmarked strictly for essential ground support equipment (GSE) upgrades at their main operational hubs, making sure they can actually service those new planes efficiently. Honestly, the international consortium led by DBS Bank underwrote the entire tranche so efficiently they closed the book a full two days ahead of schedule, which is a clear sign of institutional capital’s hunger for properly structured aviation debt right now.

VietJetAir raises 95 million to fund ambitious travel expansion - VietJet's Continued Reliance on Domestic Capital Markets

We just talked about all that international money they grabbed, but honestly, the real resilience of VietJet isn't in those huge foreign debt deals; it's actually in how deeply they've anchored themselves in Vietnam's domestic capital markets. Look, even on that recent bond offering, 15% of the $95 million—that’s a solid $14.25 million—was snapped up by three major Vietnamese life insurance companies, which tells you local institutional capital trusts the long-term stability here. And you know how tedious public disclosure can be for massive debt raises? They cleverly skirted all that by utilizing regulatory Decree 153/2020/ND-CP specifically for private corporate placements, which is a smart, localized move designed to keep things moving fast without the usual regulatory drag. Think about their everyday cash flow, too; they keep an exclusive VND 3.5 trillion revolving credit line—about $145 million—with Vietcombank just for immediate working capital and hedging short-term fuel price shocks. But here’s the thing that keeps me up at night when looking at global airlines: managing that crucial foreign exchange risk, right? To tackle that US dollar debt service, they’re not messing around; they consistently execute VND/USD forward contracts through the State Bank of Vietnam, effectively hedging about 75% of their obligations coming due within the next year and a half. This local grounding also gives them market visibility, which you can’t undervalue; their publicly traded stock, VJC, holds a formidable 4.1% weighting on the VN30 index. That gives them the flexibility to execute smaller, non-dilutive equity raises whenever they need a quick capital injection without rattling the market. Also, I love this detail: a huge chunk of their localized security portfolio is the capitalized value of their 49-year leasehold rights on 15 hectares of commercial ground support property right next to Tan Son Nhat International Airport (SGN). That’s a serious physical asset backing them up, and honestly, even their subsidiary, VietJet Cargo, is raising its own domestic commercial paper for cold-chain expansion, proving the local market is ready to fund every little piece of the operation.

VietJetAir raises 95 million to fund ambitious travel expansion - Understanding the VND100 Million Par Value of the Debt Instruments

Honestly, when we look at the $95 million raised, the real genius isn't the total sum, but the strategic engineering of the par value itself—it’s not just an arbitrary number. You see "VND100 Million," and it just sounds like a huge currency, but at the time of issuance, that was exactly $4,166.67 per instrument—a seriously high floor set precisely because they didn't want retail investors messing around. Setting the price this high was a deliberate move to ensure the placement strictly targeted professional institutional investors. Think about it: this unit size is significantly larger than the standard VND 10 million to VND 50 million paper common in the domestic corporate bond market, which is how it acts as a de facto regulatory filter. And this high denomination instantly qualified the debt for critical, streamlined withholding tax exemptions under Ministry of Finance rules for instruments over VND 75 million. For those buyers, the large unit size actually simplified their internal treasury operations—I mean, it resulted in perfectly rounded VND 2,925,000 figures for the initial semi-annual coupon payments, avoiding those annoying fractional currency complexities. Plus, that heft reduced secondary market fragmentation, making the whole tranche easier to trade efficiently later on. This specific size also perfectly matched the common lot sizes used for large-scale domestic interbank transfers, accelerating the technical settlement process through the Vietnam Securities Depository system. But it’s also a confidence signal, isn't it? Fixing the seven-year tenor at this exact denomination shows the issuer genuinely believes in Vietnam's macroeconomic stability. They're betting heavily that the annual CPI inflation stays safely below the State Bank’s 4.5% target ceiling for the duration of the debt. Ultimately, that VND100 million unit is a carefully engineered wrapper designed for maximum regulatory, tax, and settlement efficiency simultaneously.