There are partners who reduced 700 million USD with signed contracts. At the scientific workshop "Enhancing the role of the state economic sector in the socialist-oriented market economy in Vietnam - the practice of Vietnam Airlines Corporation", held on the morning of November 10, Mr. Dang Ngoc Hoa analyzed that the characteristics of Vietnam Airlines compared to other state-owned enterprises (SOEs) are highly integrated and fiercely competitive. If Vietnam Airlines does not change, does not quickly transform digitally, and improve service quality, passengers will not choose it. The Chairman of Vietnam Airlines said that due to the impact of the Covid-19 "storm", despite being supported by the State, Vietnam Airlines determined that its own solutions are the main ones. Over the past 3 and a half years, with solutions to manage cash flow, save costs and negotiate delays, the airline has reduced costs by 44,500 billion VND. Of which, many contracts signed 10 years ago are being renegotiated. Partners also sympathize with Vietnam Airlines, some partners have reduced the airline's contract by 700 million USD (more than 17,600 billion VND).
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In an effort to cut costs, Vietnam Airlines recently reduced its staff from 23,500 to 20,000, cutting 4 group-level agencies and 100 department-level agencies. Photo: Nam Khanh
Especially with Pacific Airlines - a subsidiary of VNA, after persistent negotiations, the partner reduced nearly 6,000 billion VND for Vietnam Airlines. Along with cost reduction, cost cutting and balancing revenue and expenditure, Vietnam Airlines has been profitable in the first 3 quarters of this year. According to the financial report for the third quarter of 2024, the parent company Vietnam Airlines earned about 1,870 billion VND, with consolidated profit after tax of more than 6,263 billion VND. However, due to the prolonged consequences of Covid-19, as of September 30, 2024, Vietnam Airlines still had an accumulated loss of 35,225 billion VND; the company's equity was negative more than 11,000 billion VND. Therefore, the company's HVN shares are still under control. Therefore, at the workshop, Chairman Dang Ngoc Hoa suggested that the most important solution now is to remove the mechanism bottlenecks for Vietnam Airlines to recover and develop sustainably, including approving the overall project of solutions to remove difficulties caused by the impact of the Covid-19 pandemic. "In the global competitive environment, it is not the big fish that eats the small fish, but the fast fish that eats the slow fish," Mr. Hoa worried. State-owned enterprises themselves are jealous of private enterprises . Dr. Truong Van Phuoc, former acting Chairman of the National Financial Supervision Committee, said that two very timely doses of vaccines have been "pumped" into Vietnam Airlines, which are Resolution 135 of the National Assembly on allowing VNA to borrow under the name of low-interest refinancing and increase equity through private share issuance. Thanks to that, the airline has overcome the difficulties caused by the Covid-19 pandemic and its consequences. Dr. Truong Van Phuoc raised the question, if the State stops there, Vietnam Airlines will continue to restructure to generate profits, but the accumulated losses are still large, the negative equity is thousands of billions, but why does the State not invest in an area that generates profits and has good economic prospects? The question is how to give capital to Vietnam Airlines, that is a bottleneck of the institution. Assuming that there are two issues that need to be resolved now, which are institutions and capital, Associate Professor Dr. Nguyen Van Thao, former Vice Chairman of the Central Theoretical Council, acknowledged that it is difficult for us to have state-owned corporations and groups in the top 500 of the world with the current way of doing things. Mr. Thao analyzed, saying that institutions are the bottleneck of bottlenecks, but it is necessary to go into each specific bottleneck to resolve. Enterprises that want to develop must have institutions, a legal framework and need to create for them maximum dynamism and creativity, creating motivation. “Private enterprises are jealous of state-owned enterprises, but state-owned enterprises themselves are jealous of private enterprises in terms of having full authority to decide on investment, salaries, and staff. While private enterprises are flexible, autonomous, and resourceful, state-owned enterprises have to keep asking for permission, losing all opportunities,” Mr. Nguyen Van Thao shared.
In the overall project of solutions to overcome difficulties caused by the impact of the Covid-19 pandemic for Vietnam Airlines to recover soon and develop sustainably in the period of 2021-2035, the airline proposed: 1. Allow VNA to offer additional shares to existing shareholders to increase capital when meeting the provisions at points a, c and d, Clause 2, Article 15 of the Securities Law 2019 (point b is not applicable). 2. Allow the Government to assign SCIC and assign state-owned enterprises with financial potential according to the Government's decision to invest in purchasing shares at Vietnam Airlines under the State shareholders' right to purchase shares by transferring the right to purchase when VNA implements the plan to increase charter capital and offer additional shares to existing shareholders. 3. Allow the Prime Minister to assign VNA and member enterprises with 100% charter capital owned by VNA as investors in projects under "Component Project 4 - Complex of specialized aviation service works at Long Thanh International Airport". 4. Allow Pacific Airlines to stop/exempt payment of late payment fees, late payment penalties for tax and be exempted from being subject to enforcement measures for administrative decisions on tax management according to the current Law on Tax Management.