FLC takes over Bamboo Airways

At the meeting held on the morning of September 25, Chairman of the Board of Directors of Bamboo Airways Joint Stock Company Le Thai Sam said that owning and operating this airline has exceeded the financial and management capacity of the new group of investors. Therefore, he proposed that FLC Group consider taking over ownership, management and operation of Bamboo Airways.

At the same time, he also reported the plan to transfer all shares of the investor group to FLC and requested the General Meeting of Shareholders to direct the Board of Directors and the Executive Board to support the implementation of necessary procedures, ensuring compliance with legal regulations. After research, FLC agreed to take over Bamboo Airways.

Accordingly, Mr. Le Thai Sam will continue to hold the position of Chairman of the Board of Directors, accompany the company and commit to taking responsibility for the operating results during the restructuring period.

Founded in 2017 and taking off its first flight in early 2019, Bamboo Airways, under the management of FLC Group, has pursued an extremely ambitious growth strategy. Positioned as a "hybrid airline" approaching 5 stars, the airline quickly expanded its fleet to 30 aircraft, including the modern wide-body Boeing 787-9 Dreamliner. Its flight network not only covers the domestic market but also reaches demanding international markets such as Europe and Australia.

This strategy helped Bamboo Airways capture up to 20% of the domestic market share, creating a phenomenon in the industry. However, this growth did not meet expectations. The company's financial report showed a loss after tax in 2021 of VND 2,281 billion and this figure skyrocketed to a record VND 17,619 billion in 2022. Accumulated losses by the end of 2022 reached VND 19,336 billion. The heavy dependence on capital flows from the FLC ecosystem has pushed the airline into a dangerous situation when the parent company encountered legal problems.

When FLC Group fell into crisis, Bamboo Airways was on the verge of collapse. In that context, a new group of investors appeared and played the role of "rescue". Although not directly named as the owner in the early stages, the role of Him Lam Group is known through large loans to help the airline maintain operations.

Bamboo Airways is facing many difficulties.

The real transfer of power is shaped by a complex financial transaction: a debt-for-equity swap.

Specifically, Mr. Le Thai Sam, a person closely related to the new group of investors, has become the largest shareholder of Bamboo Airways.

According to the report at the 2023 General Meeting of Shareholders, the airline has completed the conversion of VND 7,720 billion in debt into shares for Mr. Sam. This transaction, along with the complete divestment of FLC Group, has officially put an end to the old "dynasty" and opened a new era for Bamboo Airways under the leadership of a new group of shareholders.

From mid-2023, after the transfer process is completed, Bamboo Airways will undergo a "major surgery" in all aspects.

The fleet was drastically reduced from 30 aircraft, leaving less than 10 narrow-body Airbus A320/321 aircraft for synchronization and cost optimization. The entire Boeing 787-9 wide-body aircraft and Embraer regional jets were returned. The international flight network was completely suspended, and inefficient domestic routes were also cut to focus on the main routes.

The results of the restructuring are beginning to show in the financial statements. In 2023, the airline unexpectedly recorded a positive after-tax profit of VND236.8 billion. However, the airline's management said that this figure did not come from core business activities but mainly due to "reversal of provisions and debt forgiveness by partners" during the negotiation process to return the aircraft. At the 2024 Annual General Meeting of Shareholders, the management set a plan for 2024 to lose VND1,387 billion and affirmed that this would be "the last year of loss-making business".

Despite initial stability, Bamboo Airways' journey still faces many difficulties. The biggest is the financial burden from the past. The financial report of Vietnam Airports Corporation (ACV) shows that, as of the end of the second quarter of 2024, Bamboo Airways' bad debt at ACV has reached VND 2,265 billion. ACV had to set aside 100% of the provision for this bad debt, showing a very high level of risk.

PHAM DUY

Source: https://vtcnews.vn/flc-tiep-quan-lai-hang-hang-khong-bamboo-airways-ar967390.html