Persistently negotiating step by step with international creditors to resolve the unwanted consequences caused by the negative impact of the Covid-19 pandemic, Vietnam Airlines reached an agreement with the creditors to withdraw the lawsuit in the UK Court and cancel the debt of 6,000 billion VND for its subsidiary Pacific Airlines.
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Vietnam Airlines is gradually and successfully restructuring Pacific Airlines.
Consolidated profit of VND4,600 billion At the conference to review the work of the first 6 months of the year and deploy tasks for the last 6 months of 2024 of the State Capital Management Committee at enterprises, Chairman of the Board of Directors of Vietnam Airlines Corporation (Vietnam Airlines) Dang Ngoc Hoa said that in the first half of 2024, Vietnam Airlines continued to have positive business results. "After more than 3 years of coping with the Covid-19 pandemic, especially when faced with the issue of whether or not to bankrupt the national airline, Vietnam Airlines has been operating effectively, and its financial situation has gradually improved. In the first 6 months of 2024, Vietnam Airlines' consolidated profit reached VND4,600 billion. This is very timely and positive information in the context of many difficulties in the international and domestic aviation markets," said Mr. Dang Ngoc Hoa. |
Chairman of the Board of Directors of Vietnam Airlines Dang Ngoc Hoa.
Chairman Dang Ngoc Hoa emphasized that the consolidated profit of VND4,600 billion achieved in the first 6 months of the year had an important contribution from the debt cancellation plans of the subsidiaries, especially in the case of Pacific Airlines . In March 2024, international creditors filed a lawsuit against Vietnam Airlines in the British Court and announced that they would take further legal action if the two sides could not reach a common agreement on handling Pacific Airlines' aircraft lease contract. Faced with this situation, Vietnam Airlines resolutely and persistently negotiated step by step. Finally, with the plan to return the entire fleet of 6 leased A320 aircraft, the creditors agreed to cancel Pacific Airlines' debt of more than 250 million USD, equivalent to about VND6,000 billion, and agreed to withdraw the entire lawsuit in the British Court. Returning the aircraft early is a strategic part of Pacific Airlines' restructuring process, but achieving the above results requires a great effort in the negotiation process with partners to handle the financial situation of airlines due to the impact of the Covid-19 pandemic. Debt repayment extension with a loan of VND 4,000 billion Sharing more about the difficulties of the Vietnamese aviation industry in general and of Vietnam Airlines in particular, Chairman Dang Ngoc Hoa said that the increase in jet fuel prices to 102.7 USD/barrel on the world market has pushed the airline's fuel costs up by VND 2,560 billion compared to before the pandemic. In addition, Vietnam Airlines has a global flight network, so currency fluctuations in the markets also cause losses for the airline due to the impact of dual exchange rates. A 1% change in the VND/USD exchange rate will cause Vietnam Airlines to lose more than VND 270 billion. Meanwhile, in the first 6 months of the year, the exchange rate increased by about 4.8%, causing Vietnam Airlines to lose more than 1,000 billion VND. Particularly for the Japanese market, before the Covid-19 pandemic, the Japanese yen exchange rate was 105 yen/1 USD but is now falling sharply to 157 yen/1 USD, even falling to 165 yen/1 USD. Therefore, Vietnam Airlines also lost hundreds of billions of VND from revenue in the Japanese market. In addition, the severe shortage of aircraft also affected the airline's revenue and profit. Before the pandemic, the Vietnamese aviation industry had 230 aircraft but now there are only 160 aircraft, a 32% decrease in resources due to the impact of the disruption of the global supply chain.Vietnam Airlines has to compete with 120 airlines flying to Vietnam. If we do not improve our safety and service quality, we will not be able to attract international customers. Proof of this effort is that The Airline Passenger Experience Association (APEX) recently announced that Vietnam Airlines has received the 5-star airline award. Vietnam Airlines is also proud to be ranked 11th in the list of the 25 best airlines in the world in 2024 by AirlineRatings.com (a prestigious international airline rating organization based in Australia). Chairman of the Board of Directors of Vietnam Airlines Dang Ngoc HoaIt is forecasted that in 2024, the aviation business environment will still face many challenges from the global geopolitical and economic situation. In that context, Vietnam Airlines has developed key goals, directions, and tasks in the final stage of its recovery roadmap. The airline has focused on implementing the restructuring project with comprehensive solutions on restructuring assets, capital sources, investment portfolios, organizational structure, and corporate governance innovation to overcome the consequences of the Covid-19 pandemic and create a foundation for sustainable development. On June 29, the National Assembly passed the Resolution of the 7th session, allowing Vietnam Airlines to extend the repayment period for the refinancing loan. Accordingly, the State Bank automatically extended the repayment period 3 times when the repayment period for Vietnam Airlines' VND 4,000 billion loan is due to overcome immediate difficulties. The extension period for each time is equal to the first recapitalization period, the total duration of the recapitalization extensions is a maximum of 5 years (including 2 extensions under Resolution 135 of the National Assembly). Mr. Dang Ngoc Hoa said that Vietnam Airlines is speeding up the completion of the report on the overall project of solutions to overcome difficulties caused by the impact of the Covid-19 pandemic so that the Corporation can recover soon, expand production and business activities and develop sustainably in the long term.
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