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Airlines begin to recover

Airlines are beginning to show clear signs of recovery, according to the securities firm Viet Capital Securities (VCSC).

 

VietJet Air is expected to report profits from 2022. 

 

Airlines are beginning to show clear signs of recovery, according to the securities firm Viet Capital Securities (VCSC).

The recovery of the air industry in 2022-2026 will be attributed to looser restrictions on air travel despite high daily COVID-19 case numbers and the full reopening of tourism from mid-March this year.

VietJet Air is expected to report profits from 2022, whereas Vietnam Airlines will follow suit in 2024.

VCSC estimates that the total number of domestic flights in February has almost reached pre-pandemic levels.

The reopening in mid-March will give a fresh impetus to the industry, creating more flights.

The securities firm believes there is a good chance that Viet Nam will win tourism market share from other regional countries in the medium- and long-term, thanks to the quality of airline facilities and high vaccine coverage rates.

However, the possibility of higher oil prices continues to be a matter of concern for airlines as mounting fuel bills erode profitability.

“Brent oil prices are forecast to be US$70 per barrel in 2022 and to float around $65 per barrel between 2023 and 2025. Scenario analysis of the oil prices impact on Vietnam Airlines and VietJet Air shows that the two airlines would experience considerable falls in valuation if oil prices hit over $100 per barrel in the next three years,” said VCSC.

VCSC estimates the two airlines' domestic flights will return to the pre-pandemic level in 2023 and for international flights by 2026.

According to the Civil Aviation Authority of Viet Nam, total flights of all Vietnamese airlines plunged to a record low of 1,311 in September 2021 due to strict restrictions on air travel.

The figure soared to 25,220 in February 2022, thanks to the easing of air travel constraints.

VCSC said air flights have been recovering in a V-shaped pattern since the first easing in October 2021.

Source: VNS

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