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Private airlines seek financial incentives to overcome tourism slump during pandemic

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Private air carriers, including Vietjet Air and Bamboo Airways, have asked for preferential loans to overcome the serious crisis caused by Covid-19.

Airlines once again have complained about the difficulties they have faced since the Covid-19 breakout and have asked for urgent help at a workshop on overcoming crisis and sustainable development held by the Vietnam Aviation Business Association (VABA) some days ago.

Private airlines seek financial incentives to overcome tourism slump during pandemic

A representative of Vietnam Airlines said the pandemic has wiped out half of revenue of the carrier so far this year. It predicts a consolidated loss of VND14-15 trillion this year and cash flow deficit of VND15 trillion.

According to Ho Ngoc Yen Phuong, deputy CEO of Vietjet Air, before the pandemic, the carrier had a high annual growth rate of 30 percent. Because of the pandemic, the revenue has dropped by 70-75 percent. The airline incurred a loss of VND2.4 trillion in the first nine months of the year alone.

“Vietjet Air has haf to sell a lot of assets accumulated over many years of operation. We are lacking trillions of dong for business activities,” Phuong said.

As for Bamboo Airways, its deputy CEO Le Khac Hai said when the pandemic reached its peak, 80-90 percent of the fleet had to stop operation. Only one flight is operating every two days on backbone air routes.

Hai estimates that the loss incurred by Bamboo Airways is one-third to one-fourth of Vietnam Airlines.

The National Assembly approved a bailout for Vietnam Airlines worth VND12 trillion, including VND4 trillion worth of preferential loans disbursed through credit institutions.

Phuong from Vietjet said aviation enterprises will continue facing liquidity problems in the next 2-3 years, so they need preferential loans for 3-5 years.

She suggested appointing two powerful state-owned banks to join the program on providing preferential loans. The airlines would pay principal and interest within three years, from 2023 to 2025.

Phuong stressed that Vietjet has been making every effort to maintain jobs for 6,000 workers, including negotiating payment to pilots based on hours and slashing leaders’ salaries by 70-80 percent. However, the carrier has still incurred a big loss and needs the government’s support.

Bamboo Airways has also proposed that the National Assembly and government provide private airlines a financial support package like the one given to Vietnam Airlines. It wants to borrow money from commercial banks at the interest rate of 2-3 percent for 2-3 years.

Ngo Tri Long, a respected economist, estimates that the government would have to prop up VND1 trillion a year for the interest rate, while airlines would pay VND20 trillion a year in taxes and fees. Once airlines recover, they will make great contributions to the economy. 

Ngoc Ha

Source: https://vietnamnet.vn/en/business/private-airlines-seek-financial-incentives-to-overcome-tourism-slump-during-pandemic-693709.html

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Vietnam Airlines receives multimillion-dollar bailout package as state investment

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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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Source: https://tuoitrenews.vn/news/business/20210116/vietnam-airlines-receives-multimilliondollar-bailout-package-as-state-investment/58820.html

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Think tank forecasts 6.46 percent growth for Vietnam

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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.

Source: https://e.vnexpress.net/news/business/economy/think-tank-forecasts-6-46-percent-growth-for-vietnam-4221938.html

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SCIC to invest VND8 trillion in Vietnam Airlines

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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.

Source: https://english.thesaigontimes.vn/80183/scic-to-invest-vnd8-trillion-in-vietnam-airlines.html

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