Vietjet provides its own ground handling services, while giant SAGS "flys" 40% of its revenue.

(Dan Tri Newspaper) - Vietjet contributed 39-40% of SAGS' revenue and approximately 20% of its profit. After Vietjet's departure, SAGS is seeking to fill the void by finding new customers, expecting a recovery by 2026.

Losing a major customer, this year's business plan is downgraded.

This morning (June 20th), Saigon Ground Services Joint Stock Company (SAGS - stock code: SGN) held its 2025 annual general shareholders' meeting.

One of the key issues that shareholders noted at the general meeting was that SAGS had terminated its comprehensive ground handling service contract with Vietjet Aviation Joint Stock Company (Vietjet) from the second quarter of this year. The termination occurred at Tan Son Nhat International Airport. SAGS stated that Vietjet would be handling its own ground handling services at the airport.

Vietjet provides its own ground handling services, "parting ways" with SAGS (Illustrative image: SGN).

Following the loss of a major client, SAGS plans for both revenue and profit to decrease in 2025. Specifically, revenue is projected to fall by 11% to VND 1,392 billion, and after-tax profit is expected to decrease by 41% to VND 159 billion.

The management board aims to find new customers and develop new services to increase revenue, prioritizing the implementation of measures to expand production and business at Long Thanh airport, and expediting debt collection...

Responding to a shareholder's question about the impact of losing a major customer, Mr. Nguyen Cao Cuong, Chairman of SAGS, said that Vietjet accounts for 39-40% of the company's revenue and about 20% of its profit. However, for a large airline with a significant fleet size and market share, the shift towards self-service ground handling is appropriate.

According to Mr. Cuong, after Vietjet left, the airline leased the equipment that SAGS was not using for a period of 3 years, at nearly 4 billion VND per year. After deducting depreciation, the company made a profit, not a loss.

The chairman of SAGS stated that to serve Vietjet, the company needed more than 300 domestic employees. After Vietjet departed, SAGS retained 90 people for Vietravel Airlines, while some were allocated to the Long Thanh airport operations and others as reserves to serve another domestic airline. Approximately 200 people have since gone to work for Vietjet.

Mr. Cuong acknowledged that, after Vietjet's departure, SAGS's revenue and average employee salaries were expected to decrease. However, the management proposed maintaining the average income at 24 million VND/person/month as in the previous year, resulting in additional costs of approximately 50 billion VND. Therefore, this year's profit decreased more significantly than the decrease in revenue.

Explaining to shareholders the reason for trying to keep employee salaries at the same level, he said he wanted to retain workers for future projects. At the same time, the management did not want to reduce employee income while the company was still profitable; a reduction would be illogical.

To compensate for the revenue and profit losses from Vietjet, Mr. Cuong said SAGS has been seeking new clients. Recently, the company won a contract to provide ground handling services for an airline in the US, generating revenue of 60 billion VND per year, with a profit of approximately 10-20 billion VND, and expected to increase in the coming years.

At the same time, SAGS is also negotiating with Sun Phu Quoc Airways to provide services at the airport. Mr. Cuong is confident that the negotiations are successful and have a high chance of success. If successful, SAGS could generate an additional revenue of approximately 200 billion VND per year, resulting in a relatively large profit.

Additionally, the SAGS chairman noted that the company will only return to its 2024 revenue and profit figures in 2026 and will strive to avoid reducing employee income.

Expanding operations at Long Thanh Airport

Regarding business operations at Long Thanh Airport, at the end of 2024, the SAGS consortium with Hanoi Ground Services Joint Stock Company (HGS) won the bid for the Investment Project to build and operate repair and maintenance services for aviation equipment and technical and commercial ground services No. 2 at this airport.

The company's leadership has identified expanding its business at Long Thanh Airport as a top priority.

In 2024, SAGS saw a 4% increase in revenue and a 13% increase in after-tax profit, reaching VND 1,565 billion and VND 270 billion respectively. The company had to make provisions for doubtful receivables from Bamboo Airways and Vietravel Airlines.

Also in 2024, SAGS negotiated and signed ground handling contracts and welcomed 10 international airlines to operate to Tan Son Nhat, Da Nang, and Cam Ranh international airports.

Source: https://dantri.com.vn/kinh-doanh/vietjet-tu-phuc-vu-mat-dat-ong-lon-sags-bay-40-doanh-thu-20250620134520837.htm