Pacific Airlines was established in 1991 with total initial capital of VND40 billion. The founders were Vietnam Airlines and Saigontourist.

After many years of poor business performance, in early 2005, the government had to transfer 86.49 percent of state capital to the Ministry of Finance (MOF) for management and restructuring. 

In August 2006, it was transferred to the State Capital Investment Corporation (SCIC).

To restructure, the government agreed to sell 30 percent of shares of the air carrier to Qantas. The Australian airline poured $50 million into Pacific Airlines to acquire 18 percent of the airline. Later, the foreign ownership ratio rose to 30 percent, and Pacific Airlines was renamed as Jetstar Pacific Airlines.

May 2, 2007 witnessed the establishment of the first budget airline in Vietnam, which was considered an important turning point. This was the first air carrier with foreign investment.

However, the presence of the foreign partner could not improve the airline’s business results. The 2008 global recession, fuel cost increases and an old fleet (over 15 years old), and restrictions in operation all caused Jetstar Pacific to incur big losses, reaching VND2.1 trillion in 2005-2011.

The airline once again fell into difficulties. In late 2011, it became insolvent with stockholder equity minus VND600 billion and accumulated loss of VND2.5 trillion. 

Once again, to save Jetstar Pacific, in early 2012, the PM requested Vietnam Airlines to receive state capital in Jetstar Pacific and carry out the second restructuring.

Vietnam Airlines, which then became a big shareholder, took actions to restructure Jetstar Pacific into a traditional airline and LCC (low cost carrier). Thanks to the moves, Jetstar Pacific saw its losses decrease and began making a profit in 2018-2019.

However, by 2019, the airline reported a loss of VND4.4 trillion.

The Covid-19 outbreak in 2020 dealt another blow on Jetstar Pacific, which made it unable to recover. Qantas itself was then facing difficulties in its host country, and accepted to leave after 13 years of operation in Vietnam.

On June 15, 2020, Qantas officially divested from Jetstar Pacific, and Vietnam Airlines then owned 98 percent of the LCC’s shares. Jetstar Pacific regained its old name Pacific Airlines, with a new logo and identification sign.

Tough days

After two years of Covid-19, Pacific Airlines once again had no revenue. In 2022, Pacific Airlines reported pre-tax profit of minus VND2.096 trillion, though the loss decreased by VND212 billion compared with 2019.

The accumulated loss incurred by Pacific Airlines had reached VND10.7 trillion as of the end of 2022 and the stockholder equity had reached minus VND6.7 trillion. 

The ACV (Airports Corporation of Vietnam) fourth quarter 2023 consolidated finance report released on December 31, 2022 showed that Pacific Airline owed VND874 billion to ACV.

Meanwhile, Vietnam Airlines, the big shareholder of Pacific Airlines, struggled with its own difficulties. Its 2022 annual report showed that it incurred a loss of VND11.2 trillion in 2022 for the third consecutive year.

The national flag air carrier wanted to divest from Pacific Airlines, but it faced difficulties with this attempt.

The problem was the government’s Decree No91 released 2015 which said that when the state holds 50 percent of more of charter capital, it must not divest from loss-taking enterprises.

The divestment can be implemented only if Pacific Airlines makes a profit during two consecutive years and clears accumulated loss before the year of being offered for sale.

This was an impossible mission.

The Ministry of Finance (MOF) wants to amend Decree 91 on the divestment from unprofitable enterprises to help Vietnam Airlines divest from Pacific Airlines.

However, the draft of the amended decree is still under compilation and for the time being, Vietnam Airlines is still burdened with the unprofitable air carrier.

Pacific Airlines’ situation has become so serious that it has had to give back all of its airplanes. Analysts said the move will help the air carrier clear the huge debt of up to hundreds of millions of dollars. 

Ngoc Ha