Vietnam Airlines proposes Gov’t financial support to overcome difficulties

Thursday, Jun 18, 2020 07:49

Domestic passengers enter ạ Vietnam Airlines aircraft at Phú Quốc International Airport in the southern province of Kiên Giang. — VNS Photo Thu Giang

Vietnam Airlines Corporation has proposed the Government to lend a minimum of VNĐ4 trillion (US$172 million) or maximum of VNĐ12 trillion at the lowest preference interest rate to help the firm overcome serious impacts caused by the COVID-19 pandemic.

If the corporation does not receive financial support from the Government, its operation capital will be exhausted in August, said Trần Thanh Hiền, Chief Accountant of Vietnam Airlines, at a recent conference.

“We need an official message from the Government, who currently are the dominant shareholder occupying 86 per cent of Vietnam Airlines’ stake, about the availability of a support package so that our partners can be confident in the corporation’s post-pandemic recovery,” Hiền said.

“The Government's financial support is also the way the Government protects its investment in Vietnam Airlines,” he added.

A Vietnam Airlines estimate showed that the carrier’s 2020 output will decrease by 48 per cent year-on-year, making revenue fall VNĐ50 trillion. After cutting various costs, the loss will be about VNĐ15 trillion-VNĐ16 trillion.

The Vietnam Airlines official said governments of many countries have provided great stimulus packages for airlines. By May 15, Japan had a rescue package equivalent to 22 per cent of the national airline's revenue of US$89 billion and Singapore has given $11 billion. Meanwhile, Việt Nam is predicted to need $9 billion.

Vietnam Airlines has proposed issuance of shares for its existing shareholders to raise capital, in which the State will use its capital or assign the State Capital Investment Corporation (SCIC) or other State enterprises to buy its newly-issued shares at Vietnam Airlines.

The scale of issuance will be in balance with the maximum loan plan of VNĐ12 trillion.

In the medium and long term, Vietnam Airlines wants the Government to guarantee its issuance of 10-year bonds worth VNĐ10 trillion, which will be invested in the fleet for the period of 2021-25.

Hiền also said that these support solutions will face legal problems according to the current law provisions if it is implemented, so it is necessary to have a special decision from the competent authorities.

Aviation recovery

According to the International Airport Transport Association, air travel may recover more slowly than most sectors due to the serious impact of COVID-19. It predicts that Việt Nam’s aviation industry will loss US$4.35 billion in revenue this year.

Nguyễn Quang Trung, Director of Development and Planning Department of Vietnam Airlines, said Vietnam Airlines has been ready to re-exploit international routes as soon as the Government removes the policy of restricting entry and closing borders.

“We have set up task forces in every region, market and route preparing labour, flight crew, flight attendants and trade policies to welcome visitors on international routes,” Trung said.

Trung said the carrier has issued procedures and regulations on aircraft operation as well as passenger services to ensure safety and comply with the regulations and requirements of the Government of Việt Nam and other countries.

Vietnam Airlines expects to re-open routes to mainland China, Hong Kong, Taiwan and other destinations in Southeast Asia. For longer routes such as to Europe and the US, it may take until the end of this year, even early 2021, because the COVID-19 pandemic is still posing problems.

“The operation of these flights is still subject to the final decision of the Government,” Trung said.

As for national market, the flag carrier is making a breakthrough in expanding its domestic flight network in an effort to implement the strategy of developing the domestic flight network and response to the Việt Nam National Administration of Tourism’s tourism promotion campaign.

Opening new domestic flight routes is also expected to contribute to promoting trade and tourism, especially in the context that Việt Nam was entering a "new normal" period, focusing on socio-economic development and stimulating domestic tourism demand. — VNS

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