VN air carriers in danger of bankruptcy, faces risk of being sued because of big debts

Vietnam Airlines is in an extremely difficult situation as it continues incurring losses. Private airlines, including Vietjet Air and Bamboo Airways, have also been affected financially.

VN air carriers in danger of bankruptcy, faces risk of being sued because of big debts

The Ministry of Planning and Investment (MPI) said that the Covid-19 pandemic has caused the air transport market to seriously decline. Air transport demand has decreased by 34.5-65.9 percent compared with 2019, while air transport revenue in 2020 dropped by 61 percent.

More seriously, the third outbreak occurred on pre-Tet days, which caused the aviation sector’s revenue to plummet by 80 percent compared with the same period last year. Enterprises’ solvency has seriously been hurt.

MPI warned that with the current Covid outbreaks and changing decisions made by passegers, the aviation sector will remain in serious difficulty in 2021 and is only likely to recover in 2024.

Inaccurate information about the Covid outbreak recurrence, it said, led to a massive cancellation of tickets, thus causing big losses to the aviation sector and problems in cash flow.

According to MPI, Vietnam Airlines had an estimated loss of VND4.8 trillion in the second quarter and VND10 trillion in the first six months of the year.

The overdue debt of the airlines has reached VND6.24 trillion. The national flag air carrier has fallen into an extremely difficult situation and is on the verge of bankruptcy, according to MPI. Meanwhile, as commercial banks have not seen the VND12 trillion bailout promised by Government, they refuse to continue disbursement for the airlines or provide credit.

As a result, the airline is facing the risk of being sued because of the high debts, and not balancing its short-term loans due at banks.

As for private airlines such as Vietjet Air and Bamboo Airways, MPI said the carriers in 2020 optimized their operations and maintained production and business activities by transferring assets and financial investment projects they had in previous periods.

However, the ministry believes that the private airlines will face difficulties in 2021 and their financial resources will not be sufficient to maintain air transport activities.

Credit needed urgently

Vietnam Airlines is in an extremely difficult situation as it continues incurring losses. Private airlines, including Vietjet Air and Bamboo Airways, have also been affected financially.

Explaining to its shareholders about business performance in 2021, Vietnam Airlines said the impact of the Covid-19 outbreak had caused total revenue and income from other sources of the holding company to fall by 65.3 percent compared with the same period last year (VND9.558 trillion). The income from services dropped sharply by 63.7 percent.

 

Vietnam Airlines’ domestic revenue dropped by 25.8 percent and international revenue by 97 percent, while revenue from chartered flights fell by 83.5 percent. As the drop in revenue was higher than the fall in operation costs, the post-tax profit fell by VND2.793 trillion.

Having no passengers, hundreds of aircraft have been idle. According to Planespotters, 127 out of 218 aircraft of four airlines in Vietnam have been suspended.

MPI has asked the Prime Minister to instruct the central bank to amend and issue a circular allowing the restructuring of debts and rescheduling of debt payments. It said that the classified debt groups should be unchanged.

The ministry said that it is necessary to reduce the lending interest rate by 3-5 percent and apply other solutions to help enterprises have working capital so they can resume production.

MPI has also proposed amending Resolution 84 dated May 29, 2020 and expanding the subjects that are entitled to 2 percent interest rate reduction for direct loans, and expand indirect lending not only to small and medium enterprises but also to enterprises in hard-hit business fields, including tourism, aviation, hotel and transport.

More importantly, MPI has asked the PM to instruct the State Bank of Vietnam (SBV) to design an interest rate support mechanism for loans from 2021 to 2023 so as to help private airlines to improve their liquidity and maintain resources, similar to the support package offered to the national flag air carrier Vietnam Airlines.

It also proposed that the Ministry of Transport (MOT) be allowed to extend the time for 50 percent reduction for the taking off/landing fee and flight control service fee. In addition, it asked to extend the time for zero dong fees from specialized aviation services on the list of products and services included in the State's price framework.

The Ministry of Finance (MOF) has been asked to submit to the Government and National Assembly (NA) Standing Committee a plan to amend Resolution 1148 dated December 21, 2020 on continuing the environmental protection tax on air fuel at VND2,100 per liter until the end of December 31, 2021. The tax should be lowered to VND1,000 per liter, it said.

The State Securities Commission (SSC) under MOF has been asked to amend Decision No 87 on margin trading conditions and allow airlines and businesses directly affected by Covid-19 not to have their margin trading cut when profits are negative for two consecutive quarters. 

Ngoc Ha

Vietnam Airlines to sell 11 aircraft

Vietnam Airlines to sell 11 aircraft

The national flag carrier Vietnam Airlines has announced the plan to sell 11 A321ceo aircraft made in 2004, 2007 and 2008.

Local airlines raise management fees

Local airlines raise management fees

Some local air carriers such as Vietnam Airlines, Pacific Airlines, Vasco and Bamboo Airways will increase their management fees by up to VND100,000 per passenger.  

 
 

Other News

.
Civil servants go to office to work, not to show off fashion
Civil servants go to office to work, not to show off fashion
FEATUREicon  10/07/2021 

Dinh Van Minh, Director of the Legal Department under the Government Inspectorate supports the Ministry of Home Affairs' decision on banning civil servants from going to the office in jeans, T-shirts without lapels, shorts and high-cut skirts.

Lychees and the agricultural revolution in Vietnam
Lychees and the agricultural revolution in Vietnam
FEATUREicon  09/07/2021 

Farmers in the northern province of Hai Duong have earned revenue of VND1,600 billion in the lychee season this year, the highest ever. 

Minister, officers run against time to bring VND26 trillion support package to people
Minister, officers run against time to bring VND26 trillion support package to people
FEATUREicon  09/07/2021 

Minister of Labor, War Invalids and Social Affairs Dao Ngoc Dung said agencies and localities cannot be slow in disbursing the VND26 trillion support package.

Exports increase sharply, but concerns persist about trade deficit
Exports increase sharply, but concerns persist about trade deficit
FEATUREicon  09/07/2021 

Vietnam’s merchandise trade balance in the first half of the year resulted in a trade deficit. Last year, it had a trade surplus for the same period.

Zero Covid and the new quarantine strategy
Zero Covid and the new quarantine strategy
FEATUREicon  08/07/2021 

The Prime Minister’s approval to pilot home quarantine for F1 cases instead of concentrated quarantine is considered a turning point in Covid-19 prevention in Vietnam.

Unemployment in the time of Covid-19
Unemployment in the time of Covid-19
FEATUREicon  08/07/2021 

The unemployment statistics in Vietnam are always controversial.

Opening the huge market for e-sports
Opening the huge market for e-sports
FEATUREicon  08/07/2021 

Along with the development of the game market and digital entertainment platform, eSports has potential for development in a diverse and highly globalized ecosystem.

Vietnam takes a big step forward in international publications in social sciences
Vietnam takes a big step forward in international publications in social sciences
FEATUREicon  08/07/2021 

About 10 years ago, a mathematician said that Vietnam did not yet have social science study works. The comment seemed to be a bit harsh, but it did make sense, especially when it comes to international publications.

Vietnamese children need safer environment in cyberspace
Vietnamese children need safer environment in cyberspace
FEATUREicon  07/07/2021 

Children often spend a lot of time learning, playing and exploring on the internet. Besides the undeniable benefits, unseen threats are also part of cyberspace.

Vietnam’s retail market: global giants unexpectedly fall short
Vietnam’s retail market: global giants unexpectedly fall short
FEATUREicon  09/07/2021 

Vietnamese have turned the tables to become dominant in the retail market, while many foreign giants have had to leave.

Farm produce exports: specialties reach new markets
Farm produce exports: specialties reach new markets
FEATUREicon  08/07/2021 

Despite Covid-19, Vietnam’s farm produce exports still achieved impressive results, especially litchis.

Newspapers and social media: cooperation or confrontation?
Newspapers and social media: cooperation or confrontation?
FEATUREicon  07/07/2021 

VietNamNet spoke with Nguyen Ngoc Chu, a respected mathematician, who is a well-known Facebooker whose posts on his page attract at least 1,000 likes each.

Is Vietnam’s Covid-19 treatment Favipiravir drug effective?
Is Vietnam’s Covid-19 treatment Favipiravir drug effective?
FEATUREicon  07/07/2021 

Vietnam has never included any antiviral drugs in its Covid-19 treatment regimen because of unclear and unproved effectiveness of the drugs in clinical trial results.

What’s behind the high GDP growth rate?
What’s behind the high GDP growth rate?
FEATUREicon  07/07/2021 

The high GDP growth rate of 5.64 percent reported for H1, when a number of large cities and provinces were under social distancing, businesses had to close, and people lost their livelihoods, has puzzled many people.

Strengthening tools to protect children in cyberspace
Strengthening tools to protect children in cyberspace
FEATUREicon  05/07/2021 

The strong development of the Internet and social networks has made children become digital citizens early, which brings many benefits in the service of learning, entertainment, and enhanced social interaction.

CPI rises slowly as people run out of money
CPI rises slowly as people run out of money
FEATUREicon  06/07/2021 

The reported CPI only reflects 60-70 percent of the real situation, according to the former Chair of the Hanoi Supermarket Association Vu Vinh Phu.

Minister of Home Affairs: state apparatus is too cumbersome
Minister of Home Affairs: state apparatus is too cumbersome
FEATUREicon  06/07/2021 

Minister of Home Affairs Pham Thi Thanh Tra says that the state apparatus is overly cumbersome with too many levels of hierarchy and an overlapping structure in ministries and ministerial-level agencies.

2022 World Cup qualifier: What is Vietnam striving for?
2022 World Cup qualifier: What is Vietnam striving for?
FEATUREicon  06/07/2021 

The Vietnamese team already knows exactly the opponents in the final qualifying round of the 2022 World Cup. How far does it want to go?

Vietnam railways corporation incurs big losses, thousands of workers take leave
Vietnam railways corporation incurs big losses, thousands of workers take leave
FEATUREicon  06/07/2021 

The Vietnam Railways Corporation (VNR) is experiencing its toughest days in history as many trains have stopped running during Covid-19. Many workers have had to take unpaid leave.

Fighting for $52 billion market, int’l groups flock to Vietnam
Fighting for $52 billion market, int’l groups flock to Vietnam
FEATUREicon  05/07/2021 

Despite the effects of the Covid-19 pandemic, the e-commerce industry still witnessed explosive growth in 2020.

 
 
 
Leave your comment on an article

OR QUICK LOGIN