HÀ NỘI —  The Government will propose to the National Assembly an extension of a deadline for payment of a loan worth VNĐ4 trillion (US$157.2 million) of the national carrier Vietnam Airlines, Minister-Chairman of Government Office Trần Văn Sơn said at the meeting of the National Assembly Standing Committee on Wednesday.

Under the proposal, the National Assembly will allow the State Bank of Việt Nam to extend the refinancing loan repayment deadline for credit institutions that provide lending to Vietnam Airlines.

Because the issue extends beyond the scope of the Law on the State Bank of Việt Nam, it needs to be considered by the National Assembly following a report to the Politburo.

Sơn said that Vietnam Airlines is struggling with financial difficulties due to the impact of the COVID-19 pandemic.

In 2020, due to the impact of the COVID-19 pandemic, Vietnam Airlines asked for a Government support package worth VNĐ12 trillion, including VNĐ4 trillion for refinancing and VNĐ8 trillion in a bond issue for existing shareholders to increase its charter capital.

The proposal got a nod from the National Assembly in November 2020, with warnings that the national carrier was on the verge of bankruptcy with a total overdue debt worth around VNĐ6.24 trillion.

The State Bank of Việt Nam provided support to the carrier in the form of refinancing to credit institutions with an agreement that no more than two extensions would be granted to any deadline, meaning that the carrier could borrow a maximum of VNĐ4 trillion on a zero interest rate for three years.

On July 7, 2021, Vietnam Airlines signed credit contracts with three commercial banks, including SeABank, MSB and SHB for loans worth totally VNĐ4 trillion.

Vietnam Airlines reported an after-tax loss of more than VNĐ11.2 trillion in 2022. By 2023, the loss was halved to VNĐ5.7 trillion. However, the aggregate loss was estimated at VNĐ40 trillion.

Travel demand has recovered post pandemic, helping the carrier to earn a pre-tax profit of VNĐ1.5 trillion in the first quarter of this year.

Vietnam Airlines’ restructuring plan for 2022-25 period is under consideration for approval. — VNS