Vietnam Airlines asks government for help

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Vietnam Airlines is asking for a government bailout to the tune of VND 12 trillion, or $ 518 million. Sources report that the airline is expected to report a loss of VND 13 trillion ($ 561 million) for the year. The airline, like many others around the world, has been hit hard by the drop in air travel caused by travel restrictions linked to the coronavirus.

Vietnam Airlines is the national airline of Vietnam and a member of the SkyTeam airline alliance. Photo: Vietnam Airlines

The financial situation

Vietnam Airlines will seek $ 518 million in government aid as its revenues have fallen by about 50%, according to VNExpress. At a meeting last week, CEO Duong Tri Thanh said revenue had halved from the previous year, to around 50 trillion dong, or $ 2.2 billion.

Vietnam Airlines Coronavirus
The country of Vietnam is doing quite well in managing its coronavirus situation. In fact, at about four cases per million people, it’s one of the best. Photo: Vietnam Airlines

At the end of March, Vietnam made the difficult decision to suspend international flight arrivals. After that, Vietnam Airlines would only have operated an average of four domestic flights per day.

However, these strict actions seem to have made a difference. According to Worldometer, the country has one of the lowest infection rates in the world, especially for a population its size (around 96 million). In the past month, it has even logged a handful of days with zero new cases.

Financial aid options

Government advisers are reportedly considering other options to keep the airline afloat. The possibilities mentioned include the issuance of additional shares to existing shareholders or the investment authorization by the sovereign wealth fund State Capital Investment Corporation.

The airline’s CEO said the funding issue was raised with the 8.6% stake in All Nippon Airways. However, as the Japanese carrier is also facing financial difficulties, it would not be able to help Vietnam Airlines.

A government adviser has reportedly suggested taking the route other international airlines have taken: taking a government bailout.

Activity resumes, but slowly

For many airlines, international operations declined by as much as 95% at the height of the crisis. This is something the CEO of Vietnam Airlines echoed, saying things haven’t been so bad since the end of the Vietnam War:

“Since 1975, there have never been fewer flights in Vietnamese skies”, -Duong Tri Thanh, CEO of Vietnam Airlines via VN Express

However, as countries around the world ease some border restrictions, the numbers are slowly rising. In fact, the airline’s passenger count last month reached 84% of 2019 levels.

Vietnam-Airlines-ATR-Wet-Lease
Vietnam Airlines is offering a pair of ATR-72s for a six-month lease. Photo: Getty Images

Thanh expects the domestic market to return to pre-pandemic levels by the end of 2021. For international travel, he plans an additional year.

Do you think the Vietnamese government will end up providing Vietnam Airlines with a bailout? Or will the airline find the financing it needs elsewhere? Let us know your thoughts in the comments.

Simple Flying has contacted Vietnam Airlines for comment, but no response was received until the time of publication.


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