Vietnam Airlines awaits bailout as debts remain high

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According to Deloitte Vietnam, the flag carrier’s short-term debt at the end of the second quarter of the year had exceeded short-term assets.

At that time, Vietnam Airlines had reported shareholders’ equity of minus VND 4.9 trillion, while short-term debts had reached a very high level, nearly VND 52.7 trillion, far exceeding its assets. short term (16.2 trillion VND). Vietnam Airlines’ payment arrears had soared to around VND 10.5 trillion.

According to Deloitte Vietnam, the airline’s ability to operate will depend on government financial support, banks’ decisions on extending payment of bank loans, and payment of suppliers and lenders.

Meanwhile, the HCM City Stock Exchange (HOSE) has warned of the possibility that Vietnam Airlines may be forced to withdraw its shares (HVN) because the carrier has violated the three things, which, if referred to applicable laws , would be obligatorily deregistered.

In principle, a company’s shares are delisted if its production and trading results over the last three consecutive years, or if the total accumulated losses, exceed the actual share capital, or if its shareholders’ equity is negative, as indicated in the audited financial report for the last year.

Vietnam Airlines saw its cumulative loss reach VND28.9 trillion ($1.2 billion).

Due to its poor trading performance, HVN’s stock price is falling. During the September 8 trading session, the share price fell to the floor price of 15,150 VND per share. Thus, over the past six months, the share price has fallen by 10,000 VND per share, compared to 25,000 VND.

In theory, Vietnam Airlines will recover if rescued by the government as it was in 2021, when it fell into a similar situation. At that time, he reported big losses and doubted his ability to operate due to the impact of the Covid-19 pandemic.

In 2021, Vietnam Airlines also reported negative cash flow and secured a VND 12 trillion bailout which supported its liquidity.

In September 2021, the air carrier issued shares to existing shareholders (the state holds 86% of the shares) to increase the share capital by VND 8 trillion.

Earlier, the National Assembly and the government agreed to rescue Vietnam Airlines through the State Bank of Vietnam refinancing program worth VND 4 trillion provided to credit institutions after the institutions provided additional loans to service the business.

However, some analysts have pointed out that the large-scale package can only help Vietnam Airlines improve its liquidity until early 2022.

Vietnam Airlines recently accelerated the restructuring of the company by selling assets (planes, shares), but it is facing difficulties due to legal proceedings. Meanwhile, the situation is getting worse as the price of airline fuel rises, driving up operating costs.

Many international air routes have yet to reopen, which is why passenger numbers are down. The number of foreign travelers to Vietnam is still lower than in the pre-pandemic period.

The possibility of giving a second bailout to Vietnam Airlines is proving more difficult as the government must now muster its strength to fight inflation, and SBV must tightly control the money supply of the economy amid the record escalation of prices of goods and services around the world.

The history of Vietnam Airlines doing business and carrying out political tasks has attracted the attention of investors.

Vietnam Airlines has completed a corporate restructuring plan in 2021-2025 and reported to shareholders and agencies for approval.

According to the plan, in 2022, Vietnam Airlines would implement three solutions to fix consolidated loss and minus consolidated equity.

Vietnam Airlines will improve the air transport business, make effective use of production capacity so as not to increase the losses accumulated during the period when the market has not fully recovered, and make profits in the next few years.

The company will restructure its assets and financial portfolio to increase revenue and improve cash flow. Under the previous plan, Vietnam Airlines said it will sell or resell and lease old planes, make divestitures and transfer capital from some financial investment portfolios, mainly in 2022-2024.

Vietnam Airlines also said it will make necessary preparations to implement the share issuance plan to increase equity once it gets approval from relevant agencies.

As Vietnam Airlines faces big problems, private airline Vietjet Air released its second-quarter financial report with after-tax profits of VND 181 billion, bringing cumulative first-half profits to VND 426 billion.

Manh Ha

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