Speaking at the scientific conference “Enhancing the Role of State-Owned Enterprises in a Socialist-Oriented Market Economy in Vietnam – Practical Experience from Vietnam Airlines,” held on the morning of November 10, Chairman Hoa analyzed how Vietnam Airlines differs from other state-owned enterprises due to its high degree of global integration and intense competition.

Without transformative changes, rapid digital transformation, and improvements in service quality, Vietnam Airlines risks losing customers, according to Hoa.

Although the airline received state support during the COVID-19 pandemic, Vietnam Airlines relied heavily on its internal solutions for recovery.

Over the past three and a half years, Vietnam Airlines has managed to cut costs by 44.5 trillion VND (approximately $1.85 billion) through measures including cash flow management, cost-saving initiatives, and renegotiating long-term contracts. Some partners reduced contract costs by as much as $700 million (17.6 trillion VND).

Pacific Airlines, a subsidiary of Vietnam Airlines, also secured a reduction of nearly 6 trillion VND from its partners after persistent negotiations.

In addition to cost-cutting, Vietnam Airlines’ careful budget balancing led to profits in the first three quarters of this year. As of Q3 2024, the parent company recorded profits of around 1.87 trillion VND, with a consolidated post-tax profit of over 6.263 trillion VND.

However, due to the prolonged impact of COVID-19, Vietnam Airlines reported cumulative losses of 35.225 trillion VND as of September 30, 2024, with negative equity exceeding 11 trillion VND. Consequently, the airline’s HVN stock remains under special monitoring.

At the conference, Chairman Hoa proposed that clearing regulatory bottlenecks is now essential for sustainable recovery and growth, particularly by approving a comprehensive plan to alleviate the COVID-19 impact.

“In a global competitive environment, it’s not about large fish consuming small fish, but about fast fish eating slow fish,” he warned.

Dr. Truong Van Phuoc, former Acting Chairman of the National Financial Supervisory Commission, noted that two essential “vaccines” helped Vietnam Airlines weather the pandemic: National Assembly Resolution 135, which allowed Vietnam Airlines to borrow at low-interest rates, and an equity increase through private share issuance.

Thanks to this support, Vietnam Airlines has overcome pandemic challenges. However, Dr. Phuoc questioned why the state would not further invest in a sector showing promising economic potential, especially given Vietnam Airlines’ ongoing restructuring efforts despite large cumulative losses and significant negative equity.

Dr. Phuoc pointed out that a key issue is how to inject capital into Vietnam Airlines within current regulatory constraints.

Assoc. Prof. Dr. Nguyen Van Thao, former Vice Chairman of the Central Theoretical Council, emphasized that institutional reform and funding are needed to overcome these hurdles. He observed that Vietnam is unlikely to have state-owned enterprises in the world’s top 500 without structural changes.

“Private enterprises often envy state-owned enterprises (SOEs), while SOEs also envy private companies for their ability to make swift decisions about investments, salaries, and personnel,” Dr. Thao said. “Private firms are flexible and autonomous, while SOEs miss out on opportunities due to lengthy approval processes.”

In its Comprehensive Recovery and Sustainable Development Plan for 2021–2035, Vietnam Airlines has made several key proposals:

1. Allowing Vietnam Airlines to issue additional shares to existing shareholders to increase capital by meeting certain provisions under the 2019 Securities Law.

2. Permitting the government to authorize SCIC (State Capital Investment Corporation) or other financially capable SOEs to buy shares in Vietnam Airlines by transferring the state’s share purchase rights to these entities.

3. Enabling Vietnam Airlines and its wholly-owned subsidiaries to serve as investors in Component Project 4, the comprehensive aviation service complex at Long Thanh International Airport.

4. Allowing Pacific Airlines to suspend or be exempted from overdue tax payments, fines, and enforcement measures under current tax management laws.

Ngoc Ha