Persistently negotiating step by step with international creditors to resolve the unwanted consequences caused by the negative impact of the Covid-19 pandemic, Vietnam Airlines reached an agreement with the creditors to withdraw the lawsuit in the UK Court and cancel the debt of 6,000 billion VND for its subsidiary Pacific Airlines.
Consolidated profit 4,600 billion VND
At the conference to review the first 6 months of the year and deploy tasks for the last 6 months of 2024 of the State Capital Management Committee at Enterprises, Chairman of the Board of Directors of Vietnam Airlines Corporation (Vietnam Airlines) Dang Ngoc Hoa said that in the first half of 2024, Vietnam Airlines continued to have positive business results.
“After more than 3 years of coping with the Covid-19 pandemic, especially with the issue of whether or not to bankrupt the national airline, Vietnam Airlines has now operated effectively, with its financial situation gradually improving.
In the first 6 months of 2024, Vietnam Airlines' consolidated profit reached 4,600 billion VND. This is very current and positive information in the context of aviation market "There are still many difficulties both domestically and internationally," said Mr. Dang Ngoc Hoa.
Chairman Dang Ngoc Hoa emphasized that the consolidated profit of VND4,600 billion achieved in the first 6 months of the year had an important contribution from debt cancellation plans of subsidiaries, especially in the case of Pacific Airlines.
In March 2024, international creditors filed a lawsuit against Vietnam Airlines in the UK Court and announced that they would take further legal action if the two parties could not reach a common agreement on handling Pacific Airlines' aircraft lease contract.
Faced with this situation, Vietnam Airlines resolutely and persistently negotiated step by step. Finally, with the option of returning the entire fleet of 6 leased A320 aircraft, the creditors agreed to forgive Pacific Airlines' debt of more than 250 million USD, equivalent to about 6,000 billion VND, and agreed to withdraw all lawsuits in the British Court.
Job prepayment is a strategic part of Pacific Airlines' restructuring process, but to achieve the above results is a great effort in the negotiation process with partners to handle the financial situation of airlines due to the impact of the Covid-19 pandemic.
Debt repayment extension for 4,000 billion VND loan
Sharing more about the difficulties of the Vietnamese aviation industry in general and of Vietnam Airlines in particular, Chairman Dang Ngoc Hoa said that the increase in jet fuel prices to 102.7 USD/barrel on the world market has pushed the airline's fuel costs up by 2,560 billion VND compared to before the pandemic.
In addition, Vietnam Airlines has a global flight network, so currency fluctuations in the markets also cause losses for the airline due to the impact of dual exchange rates. A 1% change in the VND/USD exchange rate will cause Vietnam Airlines to lose more than VND270 billion. Meanwhile, in the first 6 months of the year, the exchange rate increased by about 4.8%, causing Vietnam Airlines to lose more than VND1,000 billion.
As for the Japanese market, before the Covid-19 pandemic, the Japanese yen exchange rate was 105 yen/1 USD but is now falling sharply to 157 yen/1 USD, sometimes even down to 165 yen/1 USD. Therefore, Vietnam Airlines also lost hundreds of billions of VND from revenue in the Japanese market.
In addition, the situation lack of planes The severe shortage also affects the airline's revenue and profits. Before the pandemic, the Vietnamese aviation industry had 230 aircraft, but now there are only 160 aircraft, a 32% reduction in resources due to the impact of the disruption of the global supply chain.
To overcome this, Vietnam Airlines maximized the frequency of each aircraft by increasing night flight hours. As a result, the airline reduced 14 aircraft but still maintained flight hours equivalent to the level before 2019 and increased by 26% compared to the flight hours operated in 2023, ensuring to meet the travel needs of passengers.
Regarding the year-end outlook, a representative of Vietnam Airlines said that the market still has many difficulties, and the airline continues to focus on implementing solutions to ensure flight safety and service quality.
Vietnam Airlines has to compete with 120 airlines that have flights to Vietnam. If we do not upgrade our safety assurance and service quality, we cannot attract international customers.
As proof of this effort, The Airline Passenger Experience Association (APEX) recently announced that Vietnam Airlines has received the 5-star airline award.
Vietnam Airlines is also proud to be ranked 11th in the list of 25 best airlines in the world in 2024 by AirlineRatings.com (a prestigious international airline rating organization based in Australia).
Chairman of the Board of Directors of Vietnam Airlines Dang Ngoc Hoa
It is forecasted that in 2024, the aviation business environment will still face many challenges from the global geopolitical and economic situation. In that context, Vietnam Airlines has built goals, directions, and key tasks in the final leg of the recovery roadmap.
The company pays special attention to implementing the restructuring project with comprehensive solutions on restructuring assets, capital sources, investment portfolio, organizational structure and corporate governance innovation to overcome the consequences of the Covid-19 pandemic and create a foundation for sustainable development.
On June 29, the National Assembly passed a Resolution of the 7th session, allowing Vietnam Airlines to extend the repayment period for the refinancing loan. Accordingly, the State Bank will automatically extend the repayment period for the VND4,000 billion loan of Vietnam Airlines 3 times when it is due to overcome the immediate difficulties. The extension period for each time is equal to the first refinancing period, the total duration of the refinancing extensions is a maximum of 5 years (including 2 extensions under Resolution 135 of the National Assembly).
Mr. Dang Ngoc Hoa said that Vietnam Airlines is speeding up the completion of the report on the overall project of solutions to remove difficulties caused by the impact of the Covid-19 pandemic so that the Corporation can soon recover, expand production and business activities and develop sustainably in the long term.
Source: https://baolangson.vn/thong-qua-dam-phan-vietnam-airlines-thoat-vu-kien-phap-ly-tai-toa-an-anh-5015333.html
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