State and solutions to enhance vietnam airlines’ capital mobilization

i ACKNOWLEDGEMENTS My most sincere gratitude to: First and foremost, I deeply grateful to my supervisor Nguyen Thanh Ha for encouraging me to pursue this topic I am truly appreciated his valuable advices on writing outline as well as the thesis I am also grateful for his great support, constructive feedback and thorough understanding to keep me hardworking and speed up my progress on the work I would like to thank all enthusiastic staffs at financial department in Vietnam Airlines, especially Mrs Phan Diem Anh and Mr Nguyen Minh Duc– the managers and Mrs Nguyen Kim Nhung- the executive to help and provide me with insights, statistics, and other supporting documents for my research Finally, I would like to thank the National Economics University for four years of quality education I extend my sincere appreciation to all my respectable tutors and lecturers in National Economics University who have provided me with essential knowledge about finance and banking, also my family and friends have encouraged and inspired me a lot Without these supports, I would not complete this research as it is today Phan Thu Thuy Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B ii TABLE OF CONTENT Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B iii STATUTORY DECLARATION I here with formally declare that I myself have written the submitted Bachelor’s Thesis independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper Hanoi,… /… /2016 Signature Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B iv ABBREVIATIONS VNA Vietnam Airlines JSC Joint stock company WC Working capital VAT Value added tax IATA International Air Transport Association IOSA IATA Operational Safety Audit AQS Aviation quality services BOD Board of director SCIC State capital Investment Corporation ECA Export credit agency OECD Organization for Economic Cooperation and Development SEK Swedish export Credit Corporation CLMV Cambodia Laos Myanmar Vietnam FTA Free trade agreement AEC Asian economic community IPO Initial public offering ODA Official development assistant VALC Vietnam aircraft leasing company SEK Swedish Export Credit Corporation SPC Special Purpose Company Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B v LIST OF TABLES Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B vi LIST OF FIGURES Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B CHAPTER 1: INTRODUCTION 1.1 Rationale To begin a business, an indispensable element is to have capital So the issue is how to improve efficiency and raise capital in enterprises in Vietnam which is now a top concern of businesses To have an efficient business and to have effective production, right from the beginning of the process of manufacturing, enterprises need to have money to invest and to use that capital in the most efficient way Over the time studying at the National Economics university and the internship in Vietnam Airlines Joint Stock Company under the guidance of my supervisor Nguyen Thanh Ha Assoc.Prof.Phd and employers and employees in the company , I have chosen the topic "State and solutions to enhance Vietnam Airlines’ capital mobilization " to be my graduation thesis This subject is not new, however, it is the matter of urgency and necessity to each business 1.2 Research objectives The purpose of the research study: - Look into the rationale of capital, funding and methods of raising business capital of the enterprise in the economy market - Analyses to assess the status of the company of raising capital over the years, clarify success and limitation in the activities of the company Since there to propose solutions to strengthen the company's capital mobilization in VNA To understand further on how the study’s objectives will be achieved, there are two big questions introduced: What are the factors affecting the capital mobilization activity in Vietnam Airlines’ head office? What can the company to deal with the current existences in mobilizing capital? 1.3 Research methodology - Use of statistical analysis methods, comparison, investigation, analysis, integrating assessment system to assess the situation of raising capital in the joint stock company VNA Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 1.4 Scope of the research - Audience research is the subject of theoretical issues and practical in terms of capital, methods to raise capital and the state of funding in VNA - The scope of the study of the subject: capital mobilization activities at the joint stock company Vietnam Airlines 1.5 Research structure Besides the abstract, table of contents and conclusion, the thesis is structured into four chapters: - Chapter 1: Introduction - Chapter 2: Theoretical framework on fund mobilization of enterprises - Chapter 3: General condition of fund mobilization in Vietnam Airlines’ head office recently - Chapter 4: Some solutions to enhance Vietnam Airlines’ head office CHAPTER THEORETICAL FRAMEWORK ON FUND MOBILIZATION OF ENTERPRISES 2.1 Fund of enterprises 2.1.1 Definition of enterprise’s capital Many economists on behalf of different schools of economics had have different ideas on capital According to Karl Marx (1858), capital is money used to Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B buy something only in order to sell it again to earn profit which is named ‘surplus value’ For Marx, capital only exists within the process of economic exchange and it formed the basis of the economic system of capitalism In Economics book of Paul A Samuelson (2010 edition), capital was defined as “a produced and durable input which is itself an output of the economy” and “has to be produced before you can use it” From this, we can see that one common point in these concepts was capital to be input factor for a business Therefore, we can perceive capital as total initial value, participating in the next processes of the business This concept not only shows that capital is an important input for the manufacturing enterprises, but also refers to the participation of the capital in business and in the continuous process of business and production throughout the business lifetime Thus, capital is the number one factor of all activities of a manufacturing business Capital helps enterprises expand production and business, procurement of equipment or carry out new plans in the future Therefore, it is required that businesses need to have the effective management and use capital efficiently to preserve and develop the capital in order to ensure strong growth for enterprises There are some basic characteristics of capital: - The capital must represent a certain amount of property It means that capital must be represented by the value of tangible assets and intangible assets of the business - The capital needs to mobilize and generate profit, achieving business goals - The capital must be accumulated and concentrated to a certain amount, thus it is able to promote ability when investing in the economic fields, particularly in the field of business - The capital has value in term of time This can play an important role in putting capital in investment and efficiency of capital use - The capital has to associate with certain owners, which will not be put into investment if its owners think it is not profitable - The capital is conceived as a commodity and can be considered a special commodity because it is capable of being traded ownership in the capital market, the financial market - The capital is not only manifested in cash (fixed assets of the business: machinery, equipment and supplies for management activities and so on) or the tangible assets (patents, the invention, and others) 2.1.2 Role of capital in enterprise Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B Business resources play a very important role in every business It is the foundation and the premise for a start-up business For business registration, as prescribed by Enterprise Law, any business has to own enough legal capital in its business lines (which include not only cash, bank deposits, but also the property owned by the business owner) Then to conduct business’s production, business also has more fund to rent, buy machinery and equipment, technology, materials, hire labor, etc All these conditions required a business to proceed and maintain its activities in order to achieve the goals In addition, in the process of business activities of enterprises, the factors for enterprises to expand production both in width and in depth are machinery innovation, improving product quality, increasing jobs, increasing incomes for workers as well as fully functional organizational management Consequently, they improve the business efficiency and enhance the competitiveness of enterprises in the market Regarding the current situation of the trading market in our country, the lack of capital for production and business development is a matter of urgency Not only at the micro level, but our government is also relatively short of investment capital for economic development This is demanding Vietnamese businesses to look for ways to mobilize and use capital in the most effective way 2.1.3 Capital categories Corporate’s capital is usually divided into several different sections and each different combination depends on the purpose, duration, and nature of the use of capital that people divided into different categories: • In terms of the role and nature of circulation, capital entering into production and business processes can be classified into two types: Fixed capital and working capital Fixed capital Assets or capital investments that are needed to start up and run business, even at a minimal stage These assets are considered fixed when they are not used up in the actual production of a good or service, but have a reusable value Fixed-capital investments are typically depreciated on the company's accounting statements over a long period of time, up to 20 years or more Its characteristics are partially rotated slowly in many production cycles and complete one cycle when fixed assets are up to expiration date Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 39 CHAPTER SOLUTIONS TO ENHANCE EFFICIENCY OF FUND MOBILIZATION IN VIETNAM AIRLINES’ HEAD OFFICE 4.1 Oriented development of Vietnam Airlines’ head office 4.1.1 SWOT analysis 4.1.1.1 Strengths Firstly, Vietnam Airlines is the national airlines, which has a strong brand image and credibility in the domestic and regional CLMV (including Cambodia, Laos, Myanmar and Vietnam), and has a dominant position in Vietnam's aviation market In the domestic market: Vietnam Airlines has the largest network of domestic routes In addition, it has network operator’s routes and cooperation with carriers, operators of international tourists combining domestic travel In the international markets, Vietnam Airlines is an official member of the Sky Teamairline alliance network, thus it has broader international routes in compare with other domestic airlines VNA has accomplished great achievements in the global international cooperation Its participation in this alliance also confirms the competitive position of the Corporation as an international partner with most prestigious and worldwide airlines According to VNA statistics, in 2014, the market share of international passenger transport by Vietnam Airlines was maintained at 40.5% Secondly, Vietnam Airlines has young fleets consisting of advanced and modern types of aircraft in the world The fleet has grown unstably and constantly modernized; fleets of Vietnam Airlines has increased from 74 units in 2011 to 125 new aircraft generation by 2015 Particularly in 2015, Vietnam Airlines has simultaneously started operating both Boeing 787 and Airbus 350 which are the most modern aircrafts in the world and VNA is the first airline to carry out in the Asia Pacific With this credibility and brand name, the company has built trustworthiness with partners and credit institutions This makes it easier for the company to access to loan both from domestic banks and international credit institutions Vietnam Airlines owns in-flight serving infrastructure systems, and this Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 40 completed ground service facilities with multiple areas that bring higher profits Thus, Vietnam Airlines will not be dependent on any partners for supply and also reduce expense Consequently, it helps to save VNA’s capital Current assets of VNA are aircrafts These assets are of great worth and also have international values that are easily sold to firms in foreign countries When it comes to assess the collateral, these assets will be advantageous condition to receive loan These are different from fixed assets which even with high value because it would be hard to collect debts Vietnam Airlines is a joint stock company with high proportion of government’s capital Therefore, it has preferential credit ratings and be predominant in compare with other enterprises in capital mobilization activity 4.1.1.2 Weaknesses Debt to equity ratio is high This means VNA has to significantly depend on loans from other credit institutions The company is going to face the risk of failing to liquidate liabilities in time This also causes bad reputation and affects capability to access to loan of the firm in the future One of the weaknesses of the VNA is that international route network has not covered the globe, especially the long-distance routes in compare with other large international airlines Failing to create a major transit points at the major international airports in VN is another weakness compared to other countries in the region This does not meet all the demands from customers in both economy class and business class As a result, it drains a lot of profit that could have been turned into capital 4.1.1.3 Opportunities • Vietnam market In 2015, the output of Vietnam air transport grew to more than 62 million passengers, and it was an increase by nearly 24 times of 2014 The output reached 640 thousand flights, up 17.4% compared to 2014 These figures are very impressive Throughout 60 years, Vietnam aviation industry has grown dramatically in all three areas: system of airports, handling operations and air transport systems Besides great opportunities from the Free Trade Agreement (FTA) and the Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 41 ASEAN Economic Community (AEC), air transport industry is also benefited from the Government's policy to promote the growth of this sector Transport infrastructure, tourism and airlines are prioritizing investment development and planning synchronization; multi-transportation system "road-rail-air '' will continue to be formed Aviation infrastructure, airports, and especially airport gate are invested according to plan Long Thanh International Airport is being constructed and will become the largest international airport throughout the country, replacing the Tan Son Nhat International Airport (become domestic airport) In addition, the airlines is gradually carrying out the reform in fleets, with modern aircrafts and more advances, along with the improvement of the quality of the domestic as well as international airports This reformation has enhanced the attractiveness of Vietnam's aviation market Although air transport accounts for only a modest share (less than 1%) of the total freight volume of Vietnam, it makes up 25% of the export turnover In 2014, the total amount of freight by air accounted for 741,000 tons, increasing by 18.5% compared to 2013 In particular, international freight accounted for 587,000 tons, an increase by 19.6%, domestic transportation was 154,000 tons, up by 14.5% Being rated as one of the Asian market growth of air transport which is fastest in the world, Vietnam air transport market is forecast to continue to grow strongly in the coming period In particular, North America and the EU continue to be the leading market During the period 2015 -2020, it is predicted to grow from 11% to 13% Currently, Vietnam is ranked 7th in the world and 3rd in Asia – Pacific in aviation growth rate Vietnam's tourism sector continues to grow According to the General Department of Tourism, the number of foreign visitors to Vietnam in 2013 reached 7,572,352 which was an increase by 10.6% over the previous year and 7,874,312 in 2014, which was an increase by 4.0% Vietnam's tourism image in the world is enhanced with many tourism destinations such as Ha Long Bay, Son Doong cave, the cities of Da Nang and Hanoi are appreciated on the tourism media Consequently, transportation demand is growing • International market The prestige and influence of Vietnam in the international area is increasing; Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 42 Bilateral and multilateral relations are being strengthened by integration tendency, international, religious and global cooperation VN is being considered as an attractive investment location, thus it is beneficial for investor and credit institutions to consider to give loan for our country’s businesses The launch of a growing number of low-cost carrier and the increase in the number of people belonging to the middle class in emerging economies as well as the increasing need for travel by air are factors that lead to powerful growth for the world airline industry in the near future At the same time, VNA has a Low cost Airlines to entry market which is for people with low income Moreover, it will be more powerful to compete with other LCC rivals The profit gained from this may be a great additional part to capital According to the manufacturer Boeing (US), the number of people traveling by air worldwide in 2013 exceeded billion passengers for the first time It is forecast to reach 6.5 billion turns in 2032 Boeing believes the demand to fly to Asia, flying from this area and in domestic area will contribute approximately half of the growth in the world's aviation industry in the next 20 years With average GDP growth of 4.5% per year, exceeding the average growth rate of 3.2% per year in the world economy, the volume of passengers in the Asia-Pacific region is expected to grow by 6.3% annually during this same period, higher than the global growth rate ASEAN is one of the fresh aviation markets, which promise a development in the number of tourists traveling by air between Europe and Southeast Asia is forecast to increase by 5% per year over the next 20 years, offers a great opportunity for the ASEAN airlines 4.1.1.4 Threats The strong development of the low-cost carrier in the region is causing the competition to become fiercer and it poses new challenges for the airline in the control of the transportation, avoiding excess supply load versus number of customer growth and managing waste In addition, the increase in the number of aviation companies means that there are rising demands of getting loan with huge amount Consequently, the capital market, which is originally limited, will become more strict and scare Some international credit institutions begin to tighten credit limit On the Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 43 other hand, the credit limits of domestic banks are not high enough to invest the whole fleets but some instead that makes aviation businesses struggle to lend from different sources Relatively high public debt makes it difficult to mobilize fund from old resources In addition, guarantee fee, which is increased by 0,25%, increases expense for VNA The accession of the Middle Eastern airlines such as Emirates, Qatar Airways, Etihad Airways, underlines the sharp change in air transport maps between Europe and Asia The expanding flight network connecting major cities between the two continents through the gateway in the Middle East of this sector’s large firms has put pressure on all European airlines and Asia, including Vietnam Airlines Moreover, factors such as epidemic diseases, natural disasters, security, terrorism, economic instability and politic in religion containing many unpredictable risks Complicated situation are followed by fluctuations in the transport market aviation and aircraft leasing market In addition, the factors like the increasing inputs, erratic fluctuations in the price of fuel and aircraft leasing will have large effect on the efficiency of production as well as profits of business of the Corporation 4.1.2 Raising resources target of the company in period 2016-2020 Air transportation activities fundamentally, vigorously promotes the development of the Corporation in terms of size, speed and quality, rapidly narrowing the gap with advanced airlines in region In addition to maintaining a leading role in the air transport sector in the country, Vietnam Airlines aims to hold a dominant position in the area of the Mekong sub-region expansion By 2020, VNA has a global route network to meet the requirements of socioeconomic development and international integration of the country with the scale of operations in the fourth largest airline in Asia, with the young fleet and the modern technology in line with the network structure of routes; exploitation activities and maintenance of the fleet is solely undertaken by internal strength, products and services quality are good grade in the area, fully meet domestic standards and international business efficiently It is expected that 2020 revenues of VNA can Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 44 reach approximately $ 6.7 billion in order to preserve and develop the capital • Passengers transportation market prediction from 2016 to 2020 Table 4.1: Passengers transportation market prediction from 2016 to 2020 Domestic Growth Total International Growth Total Growth passengers rate passengers rate passengers 19,376,479 18,458,881 37,835,360 21,895,421 113% 20,858,536 113% 42,753,957 24,741,826 110% 23,465,853 112% 48,207,679 27,216,008 110% 26,281,755 112% 53,497,764 29,937,609 110% 29,383,003 111% 59,320,612 32,931,370 110% 32,615,133 111% 65,546,503 (Source: internal strategy document of Vietnam Airlines) 2015 2016 2017 2018 2019 2020 rate 113% 113% 111% 111% 110% • Goods transportation market prediction Table4.2: Goods transportation market prediction from 2016 to 2020 Unit: million tons Year 2015 2016 2017 2018 2019 2020 Domestic Growth rate International Growth rate Total 179,725 466,732 646,458 188,712 105% 501,932 107.5% 690,644 198,147 105% 535,696 106.7% 733,843 208,055 105% 570,417 106.5% 778,471 218,457 105% 600,758 105.3% 819,215 234,282 107.2% 629,992 104.9% 864,274 (Source: Internal strategy document of Vietnam Airlines) • Passengers and goods transportation target By 2020, passenger transport is expected to reach approximately 66 million passengers; International number would reach approximately 33 million passengers The market share of international passenger transport would reach 35% by 2020; market share of the domestic passenger transport at 61% In addition, seat using ratio would reache 74-75% The quantity of freight by 2020 is expected to be 870 million tons shipped goods According to the plan, from now until the beginning of 2019, Vietnam Airlines will deploy the entire innovated wide body fleet consisting of 33 aircrafts, including 19 aircrafts Boeing 787 Dreamliner and 14 Airbus A350-900 XWB (including purchased and rented aircrafts) to become the first airline in Asia to receive Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 45 simultaneously two modern aircraft of this latest generation While striving to grow the size of the fleet in line with market size and transport objectives set out, in condition of still limited capital investment by itself and development, it needs a flexible plan structure of fleet ownership depending on the ability to mobilize capital from various sources Moreover, in the context of air transport markets are thriving, the aircraft purchase orders of with new technology are increasing, in order to receive aircraft early means importance for corporations to make sure the competitiveness and stability of business plans In the context of equitization, Vietnam Airlines is continuing to focus on implementing solutions synchronize equitization parent company and selling shares to strategic investors; strive to achieve sales targets and profitability as planned; the capital structure, assets and debt On that basis, priority will continue to raise funds to continue to invest in a downward trend of government support, began to mobilize domestic commercial loans to reduce the use secured loans Government leaders Consequently, the total investment capital needs for 10 years from 2011 to 2020 is estimated at 9.022 billion dollars, of which the largest investment demand for the aircraft was 7.762 billion US dollars, accounting for 85% of investment need To implement business strategy and development strategy to 2020 fleet, the Corporation needs to mobilize and effectively use resources, especially financial resources 4.2 Some solutions to enhance fund mobilization of Vietnam Airlines’ head office Since the capital for investment target in the next period is enormous, VNA should mobilize fund from different sources which are included in group of raising equity, loan and management solutions 4.2.1 Raising equity solutions To ensure the ability to raise capital, sources of equity capital of the Corporation should be increased to the necessary extent - Revenues from equitization: The current situation of high debt to equity ratio together with high public debt demands the company to raise equity In the transitional period of Vietnam’s economy, equitization is the most feasible solution At present the Corporation is taking steps to implement the equitization of the parent Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 46 company In 11/2014, the parent company - Aviation Corporation of Vietnam (Vietnam Airlines) held an auction for the first time public offering (IPO) of 49 million shares Results were 100% of the shares offered to be bought off, the entire 49,009,008 shares (3:48% owned) successfully sold at an average price of 22.307 VND / share, earned more than 1,093 billion VND The capital gained from equitization is being requested to add to equity If it is confirmed, the equity of VNA will increase significantly - Additional funds from profit: After equitization, annually leaving of at least 50% of after-tax profits to supplement capital Total additional funds from profits expected to be used to supplement working capital, investment in infrastructure and ground equipment and a complementary funds for buying aircraft projects The additional capital from profits must be based on maintaining good business performance over the years This is an important solution in business performance and the ability to raise capital If the business results achieved less effectively, it will reduce capital from internal accumulation and reduced ability to mobilize capital from outside Thus, maintaining stable business performance is particularly important factor in ensuring the implementation of the strategic objectives of the Corporation - Increasing chartered capital: Depending on the specific conditions of the capital market, due to shareholders meeting’s decision may increase its chartered capital to meet part or all of the investment capital requirements in each period In term of raising equity, the most fundamental issue is to maintain business results (profit) as expected This is both to ensure additional sources of capital from after-tax profits, while ensuring for equitization and issuing more shares to raise capital which is attractive and highly efficient 4.2.2 Raising business loans solutions Raising capital for investments, especially investing fleets requires large amounts of capital, thus it is necessary to diversify the feasible forms of capital mobilization in the market In reality in the last few years, we can offer solutions with high feasibility (in order from top to bottom) as follows: - Mobilization of export credit loans: these funds will be really effective and be the lowest cost of capital for investment in aircraft in many years ahead for the VNA The commitment of the organizations (US-EXIM and European ECAs) continuing to support for aircraft manufacturers to export their products, is an Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 47 important factor to ensure the viability of this solution Along with it, the guarantee commitment of the Government of Vietnam for guaranteed loans is an indispensable condition to ensure the solutions enforceable Combining guaranteed loans with 15% commercial loans through the tender package will highly competitive and has a chance to get commercial loans at a lower cost compared to the cost of commercial capital markets - Commercial loans: Commercial loans from banks in country and abroad are basic measures to mobilize capital for investment projects in infrastructure, large equipment investment, the training project and so on In the next period, the capital requirements for training and infrastructure projects are quite large to ensure uniformity with fleet size With the prestige of Vietnam Airlines, coupled with measures to ensure the mortgage assets, VNA can mobilize domestic commercial loans at a competitive capital cost VNA should take advantage of ODA loans for projects on pilot training, technology transfer and aerospace industry These are funds with favorable interest rates, the long loan period (10-15 years) - Bond issuance When large-scale investment and limitation of credit guarantee of credit institutions reduced, VNA can carry out raising capital on the market through the issuance of bonds in country and abroad This is the channel for capital mobilization of large scale, more attractive interest rates than the market commercial loans It is suggested to create large portfolios of bonds, increasing the size of each portfolio In addition, bond yields are also issues to be studied to adjust accordingly - Diversifying the forms of capital mobilization ton invest in fleet With the limited financial resources, VNA needs to carry out research and make use of solutions of developing fleet with different structures on the market The company can consider some specific methods as below: Implementing the aircraft leasing through Vietnam Aircraft Leasing JSC (VALC) Thereby, we can ensure that VNA has fleet operators in demand with reasonable rents, without the risk of investment and financial balance Studying, using sale and leaseback structure (Sale and leaseback): This is the financial structure was used by many other Airlines, especially for less potential Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 48 capital firm and has cash flow constraints This structure can perform transactions between the VNA with aircraft manufacturers and conduct transactions with leasing companies or financial investors to sell and lease back the aircraft to meet the demand of exploitation With the above structure, the VNA can buy more planes than financial bearing (debt to equity ratio is 3: 1) because it does not affect the financial balance sheet (off balance sheet) ; enjoying all of the benefits gained from aircraft manufacturers; getting planes rented according to the investment intentions In conclusion, the corporation should use a combination of funding sources, more structured lease - purchasing flexibility to ensure adequate mobilization of financial resources for investment needs while maintaining the big financial balance safety level 4.2.3 Fund utilization and management Business needs to make every effort to improve the capacity, active in project development, investment methods consistent with the capacity of capital, technology and people To build trust with banks and credit institutions, the experience of business succeeds with earning loans showing that, they must first convince the banks in terms of the effectiveness of the plan explicitly as: obstacles and advantages of the project, the initial cost, revenue, plans to repay and so on We should create credibility with banks by debt payments on time and establish the full financial reporting and transparency, which creates conditions for the loan next time The higher capital efficiency helps businesses save a lot of cost of capital Specifically, the company should improve the efficiency of the rotation of funds, quickly find measures to recover outstanding debts Implement strict management on debts and boost the payment upon delivery situation On the other hand, there should be appropriate incentives in regime for individuals to collect debt, especially in bad debts Focusing on capital in the construction sites, especially solving problems in collecting payment for the plans of the company Specifying the payment terms in the contract such as payment methods, billing time If it is violated, it must be handled according to the seriousness of the violation level This solution is forcing customers to make payments on time in order to increase the turnover of capital, reduce interest, and improve the efficiency of capital use Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 49 Establishing production plan, financial plan, working capital, plan of capital collection and economic objectives indicators and make sure that they are realistic in accordance with the type of activities of credit institutions which consume effectively and profitably and solutions are put at the forefront Every month, reviewing the implementation of the plan, looking for causes for mistakes, to propose corrective measures promptly 4.3 Other recommendations Together with methods of solving existing problems of company, government should also give hands to support entrepreneurs It is suggested that the government should complete the legal framework, which creates the most favorable conditions for businesses in raising capital, equality of access to capital, equal in interest rates, and particularly the private sector In addition, to facilitate the production and activities of business, banks should reduce the complexity of administrative procedures, in order to create more favorable conditions for enterprises to access to funds The banks’ disbursement should be under the new mechanism to ensure the safety of funds, but also not too hard to influence overall project progress of business which in need of fund Another recommendation is to support the company in reducing input expenses through tax and expense policies, especially in some new airports During the period of equitization, in order to guarantee aircraft development projects approved by the Government, the authority should allow the debt to equity ratio higher than times Completing the system provides information to businesses on the current capital market This is one of the very limited issues of the enterprise Most businesses now lack information on policy developmental system as the main financial institutions of information on foreign financial institutions If the information channel is provided fully, it will enable businesses to easily diversify capital mobilization channels There should be guidelines and a clear mechanism for financial companies to mobilize funding for the projects in medium and long term: Adjust the provisions of the investment ratio of financial companies in projects to encourage investment activity, a major activity of financial companies Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 50 CONCLUSION In recent years, when the economy turns into the market mechanism, it has raised the issues of mobilization and effective use of funds It is a very important issue tied to the survival and development of enterprises With the initial capital, businesses which want to improve the of capital utilization, need to combine in harmony between improving equity resources and raising capital reasonably It needs to be consistent with the conditions of your business Every days and every hours under the impact of market mechanisms, businesses always have to adapt and own the business capital through searching the supply of capital and improve the efficiency of business capital utilization In the operation and development of the joint stock company Vietnam Airlines, corporations have made great achievements Along with its strengths, the VNA has contributed significantly to the aviation industry in particular and for the country generally VNA is strongly developing, enhancing brand’s image, confirming its reputation among customers and achieving many important results over the years Analysis of the company's funding shows that VNA's funding sources have Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 51 gradually increased in recent years, particularly strong in 2015 These are very commendable results for the collective staff in the company and effective leadership It can be said that the mobilization of the company's capital in recent years has been raised efficiently However, there are still existing risks and difficulties for company to resolve and overcome Specifically, the needs to enhance and strengthen the fleet require a huge amount of capital for VNA to mobilize Therefore, in the following years, the company needs to make greater efforts in order to maintain the market share when the capital market is increasingly competitive At the time, the company should diversify the capital mobilizing resources Also, improving human resources and enhancing operational management will help the company achieve the goals and plans Hopefully, VNA will always maintain its position and expand further in the financial markets as well as in regional and international aviation After the internship, going along with the knowledge I learned at school, I am encouraged to raise opinions to contribute to the management of mobilizing capital in the company Vietnam Airlines In the process of writing the thesis, there are certainly some limitations I appreciate all the comments and guidance from teacher and employers and employees in the company to improve Sincerely, Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 52 REFERENCES Vietnamese Frederic S Mishkin, dịch -“ Tiền tệ , ngân hang thị trường Tài chính” Nhà xuất khoa học Kỹ thuật, Hà Nội 2001 English Paul A Samuelson (2010), Economics Magazines Tiến Hiếu 2016 Cơ hội để ngành hàng không “cất cánh” (Online) Tin tức Address: http://baotintuc.vn/kinh-te/co-hoi-de-nganh-hang-khong-cat-canh- 20160121205214760.htm (Access on: 22/05/2016) VnEconomy 2014 Cổ phần Vietnam Airlines “lên sàn” với giá khởi điểm 22.300 đồng (Online) Chứng khoán Bảo Việt Address: http://www.bvsc.com.vn/News/2014623/294697/co-phan-vietnamairlines-len-san-voi-gia-khoi-diem-22-300-dong.aspx (Access on: 23/05/2016) Lê Hưng 2014 Vietcombanktàitrợ 160 triệu USD cho Vietnam Airlines muamáy bay (Online) ThờibáoNgânhàng Address: http://thoibaonganhang.vn/vietcombank-tai-tro-160-trieu-usd-chovietnam-airlines-mua-may-bay-29415.html (Access on: 25/05/2016) Websites Karl Marx (1858) “Pre-Capitalist Economic Formations on Marxists.org” Vietnam Airlines 2015 Dự thảo điều lệ tổ chức hoạt động Tổng công ty Hàng không Việt nam – CTCP (Online) Vietnam Airlines Address: https://www.vietnamairlines.com/~/media/Files/VNA/AboutUs/Investors/11%2 0Du%20thao%20Dieu%20le%20to%20chuc%20va%20hoat%20dong%20ca %20Tong%20cong%20ty%20HKVNCTCP.ashx(Access on: 25/05/2016) Vietnam Airlines 2015.Giới thiệu Công ty(Online) Vietnam Airlines Address: Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B 53 https://www.vietnamairlines.com/vi/gioi-thieu-congty/~/media/B9A2F769CEDA40FB9AD0EAE8D8FC0540.ashx(Access on: 23/05/2016) Golden Lotus Logo (Online).Vietnam Airlines.https://www.vietnamairlines.com/en/about-us/our-background Vietnam Airlines (head quarter) financial statement 2012, 2013, 2014, 2015 Supervisor : Assoc.Prof.PhD Nguyen Thanh Ha Phan Thu Thuy – AF54B