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Private airlines appeal for Government support




A Vietnam Airlines aircraft. VNA/ Photo Huy Hùng

HÀ NỘI — Aviation firms appealed for Government support to overcome the difficulties caused by the COVID-19 pandemic at a seminar recently held by the Vietnam Aviation Business Association (VABA) in Hà Nội.
Nguyễn Khắc Hải, deputy general director of Bamboo Airways, told the seminar last week that private airlines needed the same support that was being afforded to State airlines.

“Bamboo Airways has asked the National Assembly and the Government to consider the same support packages for private airlines that have been approved for Vietnam Airlines.”

Hải said the pandemic had severely affected the operation of airlines, and Bamboo Airways had lost up to 90 per cent of its business at the peak of the pandemic.

Although the firm has not disclosed details of its business results in 2020, Hải said additional costs for quarantine and pandemic prevention had added to the airline’s losses.

In response to this, Hải said Government financial support was necessary for firms to maintain cash flow alongside support policies such as tax breaks.

Considered a private airline with a strong financial foundation, VietJet Air is forecast to lose in 2020. Vietjet Vice President and CFO Hồ Ngọc Yến Phương told local media that VietJet Air needed VNĐ10 trillion in loans. 

“Other domestic airlines want access to preferential loans over three to five years from the State to overcome the crisis,” she said, asking the Government to simplify procedures to disburse support packages in a timely manner.

Having been issued a support package of VNĐ4 trillion at 4 per cent interest recently, Nguyễn Tiến Hoàng, deputy head of the Development Planning Department at Vietnam Airlines, said the firm was still facing with difficulties, estimating the recovery would take three to four years.

Hoàng forecast that the local aviation sector would lose $4 billion in 2020, of which Vietnam Airlines’ revenue would fall $608-652 million.

“Although the domestic market has recovered, purchasing power remains weak and ticket prices have dropped sharply. The only international routes operating are repatriation flights. The pandemic has created a long term psychological concern that has halted the aviation industry.”

Hoàng said the Government and Ministry of Transport (MoT) should not consider licensing new airlines before the market recovered.

According to the International Civil Aviation Organization (ICAO), there were two scenarios for the aviation industry. The first was a freefall followed by rapid growth, whilst the second was a three- to five-month baseline.

The ICAO forecast the aviation market would decline 48-71 per cent depending on the pandemic.

Phạm Văn Hảo, deputy director of VABA, said the association was co-ordinating with research firms to submit a plan to the Government regarding reopening international flights.

Hảo said: “In the most positive scenario, the aviation market will take three years to bounce back to where it was in 2019.”

Economist Trần Đình Thiên said given the Government held a 86 per cent stake in Vietnam Airlines, the support package was transparent and marketable. However, he said other airlines also needed refinancing interest rates from the Government to stand firm and bounce back when the global aviation market recovered.

Thiên said local airlines should focus on the domestic market as a means to survive and recover from the pandemic.

“The pandemic has changed the structure of the global aviation industry and created opportunities for local aviation firms to better serve local customers.”

According to the association, in 2019, local airlines carried more than 136 million passengers and operated more than 900,000 flights. However, the pandemic had disrupted economic activities, causing great losses to the aviation industry.

Deputy Minister of Transport Lê Anh Tuấn said the ministry would continue to monitor the situation and formulate policies to help the aviation industry recover. —



Vietnam Airlines receives multimillion-dollar bailout package as state investment



State Capital Investment Corporation (SCIC), the investment arm of the Vietnamese government, is looking to funnel VND8 trillion (US$347 million) into the charter capital of the flagship air carrier Vietnam Airlines.

On Thursday, Nguyen Chi Thanh, CEO of SCIC, revealed that the state-owned company is working with Vietnam Airlines to settle the share prices for the airline’s incoming offerings.

As per the government’s Resolution 194 on the bailout for Vietnam Airlines in light of the COVID-19 crisis, the air carrier is allowed to offer more shares to existing shareholders to increase its charter capital. The government has assigned the SCIC to buy shares of Vietnam Airlines.

While Vietnam Airlines is devising the plan to increase its capital via share offering before submitting it for appraisal of the State Securities Committee, SCIC is working to set an offering price that matches the market evaluation, Thanh said.

According to the SCIC leader, in order to set a proper price, Vietnam Airlines must figure out its corporate value, which in turn requires a business plan for no less than five years.

However, the business has yet to provide a long-term business plan as its future are still kept in limbo, with the date for resumption of international flights – a significant baseline for the plan – is still largely uncertain.

“As the development of the pandemic on the world remains unpredictable, it is hard to establish a business plan for Vietnam Airlines. Without it, we can’t assess the value of the company. Only when Vietnam Airlines returns on international routes can its business operation recover,’ Thanh remarked.

On behalf of SCIC, Thanh suggested enlisting the help of a reliable international auditing firm to assess the corporate value of Vietnam Airlines.

Meanwhile, SCIC will continue working closely with the airline and report to the Committee for Management of State Capital at Enterprises as well as other relevant authorities to ensure the efficiency and lawfulness of the investment process.

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Think tank forecasts 6.46 percent growth for Vietnam



Think tank forecasts 6.46 percent growth for Vietnam

A container ship docks at Ben Nghe Port in Ho Chi Minh City. Photo by Shutterstock/Claudine Van Massenhove.

A government think tank has pegged economic growth at 6.46 percent this year thanks to the country’s success in containing the Covid-19 outbreak and maintaining stability.

Vietnam is one of the fastest recovering economies in Asia, the Central Institute for Economic Management (CIEM) said in a report.

In the best case scenario, credit growth would be 13 percent against 10.1 percent last year, it said.

But it also warned of risks that could hamper growth, like the unpredictable global economic situation as the pandemic situation remains severe in many countries and possible anti-dumping and countervailing investigations by the U.S. and other countries.

Several international organizations have forecast a strong recovery for Vietnam this year, with lender HSBC forecasting growth of 7.6 percent. The International Monetary Fund and Asian Development Bank have forecast 6.5 percent and 6.1 percent growth.

The government has set a target of 6.5 percent.


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SCIC to invest VND8 trillion in Vietnam Airlines



A Vietnam Airlines plane – PHOTO: ANH QUAN

HCMC – The Government’s investment arm, State Capital Investment Corporation (SCIC), plans to invest VND8 trillion in Vietnam Airlines, SCIC general director Nguyen Chi Thanh announced on January 14.

In accordance with the Government’s Resolution 194 on supporting Vietnam Airlines to overcome difficulties caused by the Covid-19 pandemic, the national flag carrier will issue shares to its existing stakeholders to raise its charter capital. SCIC would represent the Government, which owns 86% of the national flag carrier, to buy the shares.

Thanh said Vietnam Airlines is drawing up the share issuance plan, which will be submitted to the State Securities Commission of Vietnam for consideration, and working with SCIC to determine the issue price.

According to the SCIC leader, to determine the issue price, Vietnam Airlines and SCIC have to evaluate the carrier’s enterprise value, which is based on its business plan for the next at least five years.

“The Covid-19 pandemic is still developing complicatedly globally, making it hard to determine Vietnam Airlines’ business plan. We cannot evaluate the carrier’s enterprise value without the business plan,” Thanh said.

SCIC has selected a world-renowned audit firm to help evaluate the enterprise value of Vietnam Airlines. SCIC is also working with the airline, the Commission for the Management of State Capital at Enterprises and other relevant agencies to ensure effective, careful and lawful investment in Vietnam Airlines.


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