Vietnam Airlines wins state favors, secures approval for $ 530 million in aid

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After months of waiting for the decision, Vietnam Airlines has received heartwarming news from the country’s government. The state has approved $ 520 million in aid for the airline’s bailout. Following the approval, the State Bank of Vietnam would refinance the airline’s credit and extend its maturity.

Vietnam’s National Assembly has approved support worth $ 520 million for the national air carrier’s bailout, announced by the government body in a statement issued on November 17, 2020. Due to a significant decline of inbound flights, the airline suffered a loss of $ 463 million for the first nine months of 2020, Vietnam Airlines reported in the financial report released in October 2020.

To stabilize its liquidity, the country’s flag bearer would place a new stock offering worth $ 74 million. Vietnam’s National Assembly reportedly announced that State Capital Investment, a holding company of state-owned enterprises, would buy 85% of the shares of the new airline on behalf of the government.

Initially, to deal with the COVID-19 crisis, Vietnam Airlines hoped to secure support loans from All Nippon Airways (ANA), a Japanese airline that owns 8.6% of the shares of Vietnam Airlines. However, ANA was unable to lend a hand to the Vietnamese carrier as it was also facing its own net loss. The first half of 2020 financial report showed ANA incurred a net loss of up to $ 1.8 billion.

Tran Thanh Hien, head of the finance and accounting department of Vietnam Airlines, presenting the financial results for the first half of 2020, said that despite airlines around the world were forced to sell their assets, Vietnam Airlines was ” proactive and took every opportunity to increase income, such as the promotion of freight transport and charter flights to bring Vietnamese passengers home and expert visitors, and the sale of vintage aircraft ”.

In July 2020, Duong Tri Thanh, the CEO of the airline, again requested government financial assistance as the company expected to record negative cash flow of $ 690 million. At the time, Vietnam Airlines was seeking urgent government assistance of up to $ 518 million.


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