Vietnam Airlines shares at heightened risk of delisting

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Shares of Vietnam Airlines (VN, Hanoi) are at risk of delisting again, after the Ho Chi Minh City Stock Exchange sent a notice to the flag carrier to that effect on September 8.

Shares of a public company are subject to delisting in Viet Nam if it suffers losses for three consecutive years, or if the cumulative total loss exceeds the contributed share capital, or if its equity is negative.

Vietnam Airlines suffered losses of nearly 11 trillion VND (467 million USD) in 2020 and 13 trillion VND (552 million USD) in 2021, while the recently released half-yearly consolidated financial statements for 2022 highlighted light a new net loss exceeding 5,100 billion dong (217 million USD). ).

By the end of the second quarter, it had accumulated losses of around VND29 trillion ($1.23 billion) and its equity was negative VND4.9 trillion ($208 million). Liabilities exceeded assets by 36.44 trillion VND ($1.55 billion) and outstanding payments amounted to more than 14.85 trillion VND ($637 million). Deloitte Vietnam warned in the report that the carrier may struggle to maintain operations.

The financially-troubled national carrier itself forecasts a pre-tax loss of VND9.3 trillion ($396 million) for 2022. But in a statement responding to the stock exchange, it said it would seek further restructuring its finances and to issue more shares to raise funds.

A year ago, Vietnam Airlines ventured into negative equity territory for the first time with its financial report for the first half of 2021 and, as a result, faced delisting risk. He managed to avoid this after issuing an additional 800 million shares worth VND8 trillion ($340 million). However, given the scale of the ongoing losses, the exchange placed the shares under lockdown from November 3. She has since been fined for failing to disclose her subsequent financial reports on time, among other regulatory violations.

In an interview with Dân Việt newspaper on September 8, Vietnam Airlines CEO Lê Hổng Hà acknowledged the delisting risk but stressed that the company was cutting losses despite high fuel costs and unfavorable exchange rates.

“In this project, there are specific solutions on how to restructure Vietnam Airlines’ investment portfolio to achieve both revenue and profit. Good business results will solve the problem of negative equity in 2022,” he said. “In the post-Covid era, in 2022, the aviation industry continues to face many difficulties, such as the cost of fuel which at Vietnam Airlines accounts for 30% of operating costs. With low-cost airlines , it can go up to 35 to 40%.

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