Pacific Airlines, Vietnam's second-largest carrier, has escaped closure but might be sold to private investors, including foreigners, to help clear debts of up to USD$13.7 million, state media reported on Wednesday.

The Thanh Nien (Young People) newspaper said shareholders had decided to keep the airline, now capitalized at just USD$3 million, and seek fresh funds after the government demanded they make a choice.

It ordered flag-carrier Vietnam Airlines, which, along with four affiliates, owns 94 percent of Pacific Airlines, to submit plans for either raising funds for the airline through a share issue or shutting it down.

"We are left with one choice, which is to raise capital and open the door to domestic investors, and foreign investors if the government permits," it quoted Pacific Airlines chief executive Luong Hoai Nam as saying.

Nam, who moved to the job this year from Vietnam Airlines, said Pacific Airlines losses resulted from the high cost of leasing its four Airbus A310 and A321 aircraft.

In July, Pacific Airlines dropped flights linking Hong Kong and Vietnam's tourist hub Danang. It operates limited domestic flights and has routes to Kaohsiung and Taipei.

The government would make the final decision on the fate of the struggling carrier in the first quarter of 2005, state media said.

(Reuters)