return icon Vietnamnet.vn

Vietnamese airlines all are in need of timely support, says expert

It would be unfair for others if only Vietnam Airlines can receive the state support, while others still struggling for survival.

As aviation is among the hardest-hit sectors by the Covid-19 pandemic, no air carrier is safe from the current crisis, but so far, only the national flag carrier Vietnam Airlines has received government support.

{keywords}
Airlines are struggling for survival. Photo: Pham Hung/ Hanoitimes 

The National Assembly (NA) on November 17 approved the government’s proposal to help Vietnam Airlines ease the Covid-19 fallout.

Under its resolution, the NA agreed to allow the State Bank of Vietnam (SBV), the country’s central bank, to provide refinancing loans for Vietnam Airlines to maintain its operation.

At the same time, Vietnam Airlines, in which the state currently holds an 86.19% stake via the Commission for State Capital Management (CSCM), gets the permission to sell additional shares to existing shareholders to raise its registered capital. As such, the government would assign its investment arm State Capital Investment Corporation (SCIC) to buy Vietnam Airlines shares.

Vietnam Airlines previously proposed the government provide refinancing loans worth VND12 trillion (US$518.57 million) to the airline, including a loan of at least VND4 trillion (US$172.85 million) with preferential interest rates. The airline also suggested that it could sell stake worth VND8 trillion (US$345.68 million) to existing shareholders. In this case, state-owned SCIC could be the agency to buy this amount of shares.

The news immediately prompted other airlines to ask for similar support from the government.

Budget airline Vietjet suggested a refinancing loan worth VND4 trillion (US$172 million) with preferential rates in a three to five-year period for the aviation industry. Under its proposal, Vietjet would start paying debt and interest rates in the 2023-25 period, while new debts with maturity in 2020 are restructured to 2021, along with a 3% cut in interest rates for airlines’ loans.

The airline estimates under this current situation, the industry can only fully recover by 2023 at the earliest.

“Government support, in this case, is essential for airlines to overcome difficulties and maintain growth,” it noted.

Bamboo Airways also called for support packages and refinancing loans with interest rates of 2 – 3%; a 50% reduction of take-off, landing charges and navigation services fees; resuming international flights to countries with low Covid-19 risks; tightening the issuance of aviation license for new airlines until 2024; providing loans of 0% interest rates for airlines to pay workers’ salaries, among others.

Aviation expert Nguyen Thien Tong told Hanoitimes given the severe impacts to the overall industry as a whole, the government should provide equal support for all airlines. In fact, the losses private airlines face are much greater compared to that of Vietnam Airlines as they hold significant less market shares.

“The aviation market that we have today is largely thanks to private airlines,” he noted.

“The emergence of new airlines helped eliminate monopoly in the industry and made air transport more affordable to a wider public,” he stated.

“It would be unfair for others if only Vietnam Airlines can receive the state support, as others are also struggling for survival,” Mr. Tong asserted, adding it is their existence that is key for the development of Vietnam’s aviation industry.

 “A specific support measure should depend on revenue and market shares of each airline before the covid-19 pandemic, but the priority should be given to those generating profit at that period to reduce risks for the government and ensure efficiency of such support,” he stressed. 

Dim outlook for the industry

In the first nine months of this year, Vietnam Airlines suffered an accumulated loss of VND10.5 trillion (US$453.71 million). As of September 30, the airline’s working capital was also significantly reduced from VND1.74 trillion (US$75.15 million) to VND802 billion (US$34.64 million). Additionally, its total asset value of VND76.45 trillion (US$3.3 billion) shrank to VND62.37 trillion (US$2.69 billion).

In case of Vietjet Air, from an annual average growth of 30% before Covid-19, the budget airline’s revenue plunged 70-75% during the nine-month period, resulting in a loss of VND2.4 trillion (US$103.2 million). To ensure liquidity, Vietjet Air was forced to sell its assets acquired in previous years, but are still in short of working capital to maintain operation.

A representative of Bamboo Airways said at the peak of the pandemic, 80-90% of its fleet was grounded. The airline estimated its loss is equal to 1/3-1/4 of Vietnam Airlines, despite its much smaller market share.  Hanoitimes 

Ngoc Mai - Quy Nguyen

What does the 'rescue' of Vietnam Airlines reveal?

What does the 'rescue' of Vietnam Airlines reveal?

The national airline of Vietnam finally saw "the light at the end of the tunnel" when the National Assembly agreed with the Government's proposal for solutions to help Vietnam Airlines overcome difficulties caused by the Covid-19 pandemic.

State-owned giants cling to support dream

State-owned giants cling to support dream

With many state-run enterprises enduring heavy losses since the pandemic began, the National Assembly’s support package for Vietnam Airlines is bringing hope to other state-owned giants 

MORE NEWS

Sexual-assault victims choose to remain silent amid backlash on social media

Many travelers have told VietNamNet that they had been victims of sexual assault but later decided not to report their cases for fear of being ridiculed and blamed.

'South Korean street’ in HCM City deserted as business people leave

Amid business decline, some South Korean businessmen have gone bankrupt or shut down their business and left for their home country. It’s unclear if they will come back.

Foreign tech firms scale up operations in Vietnam

Molex, the world’s leading electronic component and connection device manufacturer, has announced a plan to expand its production facility in Hanoi with a total production area of 16,000 sq m.

Vietnam’s veggie, fruit imports from China surge

Vietnam spent some US$473 million importing vegetables and fruits from China between January and August, surging by 74% year-on-year and accounting for 38% of the country’s total veggie and fruit imports.

Legal move towards fair competition in pay TV market

A new decree on the use and management of broadcasting services aims to create an impartial playground between domestic and foreign pay TV service providers.

79 villas to be pulled down in Phu Quoc for construction violations

Authorities in Phu Quoc Island in the southern Kien Giang Province are removing 79 villas that were illegally built in Duong To Commune.

Vietnam needs large domestic shipping lines

The lack of domestic shipping firms has caused difficulties for export companies.

VN seeks ways to increase export of organic farm produce

The organic food market was expected to reach $437.36 billion by 2026 with a compounded annual growth rate of 14 per cent.

Twins survive after premature birth, weighing just 500g

The National Hospital of Obstetrics and Gynecology has for the first time successfully bred twins who were born at 25 weeks, each weighing just 500g.

Hanoi to spend $5.3 million to inspect old apartments

Hanoi plans to spend about VND128 billion (US$5.3 million) to appraise the quality of old apartments across the city this year.

Applying special mechanism, HCMC attracts 10 experts, scientists and talents

HCM City has issued a Resolution on the income level of experts and scientists for the fields the city needs to attract talents in the 2018-2022 period.

People should be cautious of 'easy job, high salary' in Cambodia

Nguyen Minh K., 24, of Ninh Thuan Province, still can't believe he was illegally sold to a casino in Cambodia.

25 Apple’s partners have factories set up in Vietnam

The number of Apple manufacturing partners setting up their factories in Vietnam has increased to 25 at present, four more than the 2020 figure, the tech giant said in its list of supply partners for the fiscal year 2021.

VIETNAM NEWS HEADLINES OCTOBER 5

Hanoi inaugurates new road tunnel to address traffic congestion

Netlflix asked to remove "Little Women" for distorting history

The request was made by the Authority of Broadcasting and Electronic Information, under the Ministry of Information and Communications, according to Deputy Director General Le Quang Tu Do.
back_to_top