Along with the fast recovery of the domestic aviation market, Vietnam Airlines has so far recovered 80% of its average daily revenue compared to the time before the pandemic. However, the company still has negative equity and still has to find a way to balance cash flow, restructure, and stay on HOSE.
Vietnam Airlines has negative equity from the first quarter of 2022 after 2 years of losses due to the pandemic. The bailout package of VND 12 trillion in the form of refinancing and increasing charter capital from state shareholders has saved the company to stay on HOSE until now. But if the situation continues, Vietnam Airlines may not stay on HOSE for much longer.
However, the very fast recovery of the domestic aviation market has “saved” cash flow for the airline. Mr. Tran Thanh Hien said at the 2022 general meeting of shareholders (July 28): “The average daily cash flow at this time has recovered to 80% compared to the time before the pandemic, although the line only about 20% of international flights have recovered”. This means that the company’s ability to maintain continuous operations has been greatly improved.
Mr. Hien said that the company has developed a cash flow management plan in 2022 to ensure continuous operations and reach positive agreements with creditors and suppliers.
The total amount owed to suppliers to delay payment at the end of 2021 is VND 12,851 billion, mainly for aircraft rental, repair and maintenance, and flight service expenses. Continue to work with partners on the plan to restructure the time and amount of supplier debt.
In 2021, the company restructured domestic and foreign loans to about VND 3,203 billion. The amount of principal payable in 2021, which is restructured for later years, is about VND 2,245 billion, which has significantly reduced cash flow pressure.
The recovery of 80% of daily cash flow helps Vietnam Airlines to reduce losses quickly. However, if the price of Jet A1 fuel in 2021 is 72 USD/barrel, by 2022 it will average 131-140 USD/barrel and now it is up to more than 160 USD/barrel, making all airlines are all at a loss.
“The cost of fuel if it is 160 USD/barrel, it accounts for 50% of the total flight cost, which cannot be balanced financially,” Mr. Hien said.
Therefore, in the 2022 plan, Vietnam Airlines has set a revenue of up to 45 trillion VND, but the loss is still more than 9,000 billion VND because fuel costs “eat up”.
“If the market is as good as this time, fuel price is only 80 USD, then this year the company will reduce its loss to 3,000–4,000 billion VND,” added Mr. Hien.
From July 2022, Vietnam Airlines will increase the total number of international routes to 39 routes, equal to 60% compared to 2019. Currently, the number of international routes, which account for 65% of Vietnam Airlines’ revenue, is expected to recover in 2024, based on the latest market forecast of the International Air Transport Association (IATA).
@ Saigon Times