Vietnam Airlines (VN, Hanoi) is on the verge of bankruptcy, the country’s Ministry of Planning and Investment has warned, as losses and debt continue to mount as demand for air travel fails to rebound .
Despite government approval of a VND 12 trillion ($ 519 million) bailout to bring the cash-strapped national carrier back to profitability, it is estimated to have suffered a loss 10 trillion VND ($ 435 million) in the first half of 2021, according to the ministry. said in a draft report on business development in the country in 2020 and the first five months of 2021, released on June 14. The overdue debts reached 6.24 trillion VND ($ 272 million).
Vietnam Airlines, 86% state-owned and 8.77% owned by the Japanese company ANA Holdings, is threatened with legal action over its debts. Banks no longer extend credit to the company, the report said, calling the company’s situation “extremely dire.”
At the end of March 31, 2021, its total liabilities stood at VND 59.55 trillion ($ 2.6 billion), representing 98% of its total assets. It is almost cash-strapped with a balance of cash, cash equivalents and short-term deposits of less than VND 2.1 trillion ($ 91 million).
Vietnamese airlines’ revenues fell 61% in 2020 from levels a year earlier, and the situation worsened in the first half of 2021 as the country suffers a third wave of Covid-19, forcing revenue to fall by 80% compared to the same period in 2020.
Vietnam Airlines is preparing to auction eleven of its A321s to mitigate its losses, local media reported. According to the advanced ch-aviation fleets module, it currently operates forty-nine A321-200 and twenty A321-200N, as well as two A320-200N, fourteen A350-900, eleven B787-9 and four B787-10, plus seven ATR72 -500 crewed by VASCO – Vietnam Air Services (0V, Ho Chi Minh City).
Of these 107 aircraft, 41 are currently active. However, the Vietnamese news agency reported on June 16 that only nine are in regular service, with the rest mostly inactive in Hanoi and Ho Chi Minh City. Hanoi Airport has applied to Vietnam’s Civil Aviation Authority for permission to close a taxiway to serve as a parking area, the news agency added.
Other local carriers like Bamboo Airways (QH, Hanoi) and VietJetAir (VJ, Hanoi) are also suffering, VietJetAir, for example, needing 10,000 billion VND ($ 435 million) to continue operations, according to the ministry. .
Vietnam Airlines did not immediately respond to ch-aviation’s request for comment.