Vietnam Airlines has outlined various support measures to improve its financial position following its losses in 2020.
In a filing to the Ho Chi Minh City stock exchange dated 14 April, the flag carrier has disclosed the serious impact of the Covid-19 pandemic on its business and financial performance in 2020, with passenger numbers for the full year declining 45% versus 2019.
Vietnam Airlines reports a consolidated after-tax loss of D11.2 trillion ($485 million) and an after-tax loss of D8.75 trillion. The consolidated figure includes the mainline carrier, VASCO, Pacific Airlines and affiliate Cambodia Angkor Air.
Air transport revenue declined 61% year-on-year.
The carrier intends to tap a combination of government support and introduce measures to cut costs in the short-term.
Government support policies for Vietnamese carriers amid the pandemic cover the exemption or reduction of taxes, fees and service charges, the carrier highlights.
Additionally, the government, which holds over 86% of the carrier’s charter capital, is offering it a D4 trillion interest-free loan to provide additional capital for its business and operations.
The government has also allowed the carrier to issue shares to existing shareholders to increase its charter capital up to D8 trillion, in order to provide “additional cash flow, supporting liquidity for Vietnam Airlines to maintain operations”.
Vietnam Airlines says that it has implemented short-term measures to cope with the pandemic, including reducing operations, negotiating with lessors and suppliers on reduced and delayed payments and cost reduction. It has also increased the use of bank loans for additional liquidity.
Measures are in line with the government’s directive to implement asset restructuring and solutions to replenish cash flow and improve income, the airline notes.
It adds: “Vietnam Airlines strongly believes that with the combination of measures and government support, the airline’s business results will gradually improve. Vietnam Airlines will overcome this difficult period step by step to stabilise and continue to develop.”
The carrier had made the disclosure following a 9 April warning from the stock exchange that it would put a warning status on the airline’s stocks from 15 April, citing its 2020 financial performance.