On the morning of June 21, Bamboo Airways held its 2023 Annual General Meeting of Shareholders. This is considered a turning point for the airline to enter a new phase when it replaces the entire old Board of Directors, adds a new Board of Directors and Board of Directors with the majority of knowledgeable and experienced people in the aviation industry.
Mr. Nguyen Minh Hai, General Director of Bamboo Airways
According to the new CEO of Bamboo Airways, this congress will set out the airline's operational direction for the next 5 years. In terms of business advantages, Bamboo Airways has many bright spots such as absolute safety rate (transporting more than 50,000 flights with 7 million passengers), maintaining the leading on-time rate, and being trusted by customers...
How to deal with the combined loss of more than 17,600 billion VND?
Bamboo Airways' report said that net revenue in 2022 reached VND 11,732 billion, an increase of 230% compared to net revenue of VND 3,557 billion in 2021. In 2021, the airline lost VND 4,060 billion; in 2022, it lost VND 3,209 billion, however, the loss ratio to total revenue has decreased sharply from -114% to -27%.
According to the General Director of Bamboo Airways, the airline has taken many drastic actions to reduce losses such as setting aside provisions, controlling costs, promoting core business activities, aiming for the break-even point to create momentum for the profit plan in the following year.
The airline's gross loss by the end of 2022 is VND17,619 billion. However, Bamboo Airways has simultaneously made provisions for losses and accumulated losses, issued additional equity capital through debt-to-equity conversion, and continued to seek strategic investors. As a result, the charter capital value as of May reached VND26,220 billion, reducing the debt ratio, bringing the financial debt/equity ratio down to 0.7 times.
With a total loss of more than VND 17,600 billion by 2022, VND 3,200 billion is a loss from aviation business activities, the remaining VND 13,000 billion is from provisions made before the new investor restructured Bamboo Airways. This provision is a policy and drastic measure to make the airline's financial activities transparent.
The question is, with this loss, can Bamboo Airways continue to operate? According to a representative of Bamboo Airways, before May, the airline had converted more than 7,000 billion VND of debt into shares. Currently, Bamboo Airways' capital is still positive at more than 5,000 billion VND, operating normally and ensuring shareholder rights.
Bamboo Airways is expected to continue to incur losses in 2023, but the expected loss level will decrease significantly compared to 2022. The airline will focus on finding solutions to achieve the goal of breaking even and operating profitably, such as restructuring the flight network, focusing resources on potential routes that can effectively consolidate; at the same time, promoting the establishment of subsidiaries to provide better and more competitive services in the coming period.
Mr. Hideki Oshima, representative of Bamboo Airways Board of Directors
Mr. Nguyen Minh Hai also shared that there were many positive signs in the first 5 months of the year, in which January reached the break-even point from core business activities. The domestic market in 2023 is expected to continue to grow strongly, but people are also tending to tighten spending due to economic difficulties.
“The goal is to break even and make a profit by the end of 2024, but this is not just an expectation but a decree for the new leadership,” Mr. Hai emphasized.
What role will the former Japan Airlines chief play?
Notably, the new Board of Directors and Executive Board of Bamboo Airways in the coming term will include a big name from Japan Airlines. The airline has invited Mr. Masaru Onishi and Mr. Hideki Oshima, former leaders of Japan Airlines with extensive experience in managing, developing international relations and participating in major airline alliances.
Mr. Hideki Oshima, former leader of Japan Airlines, will join the Board of Directors of Bamboo Airways for the new term.
In particular, these are the personnel who participated in the successful restructuring of Japan Airlines, from an airline on the brink of bankruptcy with a loss of more than 12 billion USD to becoming profitable.
Bamboo Airways' leaders also expect that the participation of these new factors will contribute to improving efficiency and discipline in management, expanding the international market network and aviation alliances at Bamboo Airways.
Bamboo Airways also aims to develop ancillary activities to optimize costs such as establishing subsidiaries such as air cargo transportation company, ground service company, aviation engineering company, airline catering company which have been deployed since the participation and resource support of new investors.
Notably, the airline also plans for its units to be profitable from the first year of operation. In fact, Bamboo Airways' cargo transport company has been operating since early 2023 and has been profitable.
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