Airline service business recovery

As the skies became more crowded, ancillary service businesses such as catering and duty-free sales also recorded positive business results.

2023 is a challenging year for the business world, but not for the aviation industry. Financial reports of ancillary service providers also recorded high growth this year, as the aviation market gradually recovered.

Noi Bai Catering Services Company (NCS), a business that sells meals and milk tea on flights, reported a net profit of more than VND16 billion in the fourth quarter, nearly double the same period last year.

In the last three months of the year, this company achieved revenue of more than 171 billion VND, an increase of nearly 30%, with gross profit of more than 27 billion VND. In addition to revenue growth, expenses were also reduced. In particular, interest expenses and sales expenses decreased by about 30% over the same period.

"The fourth quarter profit increased by 91% year-on-year due to the domestic market's full recovery and high growth compared to the same period last year," NCS explained about the high growth in the last quarter of 2023.

Accumulated for the whole year of 2023, the company owning the Lotus Sky milk tea brand achieved net revenue of 614 billion, up 50%. Net profit increased dramatically to 46 billion VND, nearly 9 times higher than the same period. This figure partly came from the low base level of the previous year, the period when the aviation market was just entering the recovery process.

In the southern market, Tan Son Nhat Airport Services Company (Sasco, SAS) also recorded growth in its core business activities.

Sasco achieved revenue of more than VND 690 billion in the last quarter of the year, an increase of more than 24% over the same period in 2022. Gross profit reached nearly VND 383 billion, an increase of 26%, with gross profit margin at 55%.

Due to bad debt provisions, Sasco's pre-tax profit in the last three months of the year dropped by more than half, to approximately VND49 billion. However, thanks to the large profit in the third quarter, Mr. Johnathan Hanh Nguyen's company had a pre-tax profit of more than VND333 billion last year. This is also the highest level since the pandemic hit. This figure is equivalent to 75% of Sasco's peak profit achieved in 2019.

While the busy Hanoi - Ho Chi Minh City main flight route has helped two service providers make big profits, other businesses have had more diverse results. Danang Airport Services Company (MAS) recorded a revenue increase of more than 27% in the fourth quarter of 2023 compared to the same period last year, but profits decreased by 87%.

According to the company, revenue growth was only concentrated in low-margin segments such as trade, while high-margin segments such as catering or training did not increase much.

"The catering sector has only grown at Da Nang airport, while at Cam Ranh airport, Chinese and Russian airlines have not reopened, so this sector has low revenue, not enough to cover costs," MAS's explanation wrote, adding that the company is suffering losses with the catering sector at Cam Ranh airport.

Despite the decline in the final quarter of the year, MAS's 2023 results remain positive. Full-year revenue reached nearly VND147 billion, up more than 37%. Net profit was more than three times higher than the same period last year, at VND3.7 billion.

Positive results in 2023 also extend the recovery chain of the aviation service industry, after a difficult period in 2020-2021.

When Covid-19 became complicated, NCS and MAS suffered heavy losses due to the lack of passengers at the airport. NCS then had to switch to selling moon cakes and office meals to flight attendants and personnel in the aviation service industry. Mr. Johnathan Hanh Nguyen's business achieved a profit of just over 3 billion VND in 2021, compared to an average of several hundred billion VND per year. Starting from 2022, the business results of this group gradually returned, when the aviation industry began to recover.

According to the forecast of the Civil Aviation Authority of Vietnam, this industry will fully recover by the end of 2024, in line with the general trend of the Asia-Pacific market.

According to the agency, the demand for passenger transport this year is expected to be more than 84 million, an increase of 15% compared to 2023 and 6% compared to 2019 - the time before Covid-19. Of which, domestic visitors are expected to increase by over 3%, reaching about 41.5 million; international visitors are nearly 43 million, an increase of 16% compared to last year.

Minh Son

Source link