Why did Vietnam Airlines make a sudden profit?

Vietnam Airlines Corporation ( Vietnam Airlines ) has just released a report explaining the fluctuations in after-tax profit in the first quarter of 2024 and the roadmap to overcome the situation of HVN shares being controlled.

Notably, the parent company's after-tax profit in the first quarter of the year reached approximately VND1,500 billion, a sharp increase compared to the loss of VND137 billion in the same period last year. Vietnam Airlines' consolidated after-tax profit in the first quarter of 2024 reached VND4,400 billion, a sharp increase compared to the loss in the same period last year.

According to Vietnam Airlines, the first quarter of 2024 is the peak business period in the aviation industry. The airline has optimized and improved the efficiency of using its fleet and human resources; minimized costs, negotiated service price reductions, interest rates, etc., helping to increase gross profit from sales and service provision sharply.

Vietnam Airlines said its profit surged thanks to a push to exploit international passengers, restructuring efforts and peak seasonality.

The parent company's total revenue and other income in the quarter increased by 25.4% year-on-year (an increase of more than VND4,568 billion), mainly due to increased service revenue thanks to the strong recovery of the transportation market. The corporation has restored the entire domestic flight network and most international routes compared to the pre-COVID-19 period, as well as opened new routes.

"The consolidated profit after tax in the first quarter increased sharply mainly because the parent company and its subsidiaries all had profitable business operations. Vietnam Airlines also had extraordinary consolidated other income because in the first quarter, Pacific Airlines (a subsidiary) generated income from debt cancellation according to an agreement," the airline's explanatory report stated.

Vietnam Airlines' first quarter business results, announced on the evening of May 2, also showed that Pacific Airlines had negotiated to return all leased aircraft and settled debts, helping the corporation record a sudden increase in other income items, contributing significantly to consolidated profits in the first quarter of the year.

The airline reported a sudden profit thanks to the promotion of international operations, restructuring efforts and peak seasonality. Before the COVID-19 pandemic, international scheduled flights contributed about 65% of Vietnam Airlines' revenue. For example, in the first quarter, international air transport revenue returned to pre-pandemic levels, reaching more than VND13,800 billion, contributing 65% to total revenue.

Vietnam Airlines' total passenger numbers in the first quarter of 2024 reached more than 5.74 million, up 12.7% year-on-year. The airline's flight occupancy rate was 86% for the domestic market and 80% for the international market - both up compared to the same period in 2023.

What to do to remove stocks from control?

Regarding the roadmap to remove HVN shares from control, Vietnam Airlines said it has completed the overall restructuring project for the 2021-2025 period, reported to shareholders and competent authorities for consideration and approval.

According to the project, in 2024-2025, the corporation will synchronously implement solutions to enhance adaptation and profitable business; restructure assets and financial investment portfolio to increase income and cash flow; prepare necessary conditions to implement the plan to issue shares to increase equity after being approved by competent authorities.

At the end of the trading session on May 2, Vietnam Airlines' HVN shares closed at VND17,300, up about 35% compared to the beginning of the year and at their highest level since October 2022. The company's current capitalization is VND38,300 billion, equivalent to USD1.5 billion.

Source: https://nld.com.vn/vi-sao-vietnam-airlines-lai-dot-bien-196240502212127176.htm