Doubts cast over Vietnam Airlines ability to keep flying

In a recent interim statement on the performance of Vietnam’s national carrier Vietnam Airlines, Deloitte Vietnam said the airline’s ability to keep operating will depend on the government’s financial support, extensions of borrowings at commercial banks and financial institutions, as well as payables to suppliers and lessors.

As of June 30, Vietnam Airlines’ equity was a negative VND4.9 trillion ($209 million), its liabilities exceeding assets by VND36.435 trillion and its overdue payables at more than VND14.85 trillion.

The auditor had raised similar concerns in financial report on Vietnam Airlines’ operation in the first half of 2021.

Vietnam Airlines said it recorded revenues of more than VND30 trillion in revenue in the first half of this year, which is double that of the same period last year, but because of high fuel prices and many international flight routes yet to resume operations, the carrier incurred losses of VND5.1 trillion, compared to around VND2 trillion in H1 last year.

As of June 30, its accumulated loss was VND28.9 trillion.

Vietnam Airlines is looking for sources of revenue including liquidation of aircraft, aircraft engines and financial investments. The company has so far sold one aircraft, transferred the right to buy and lease one aircraft engine and liquidated its investment in Cambodia Air. It has earned more than VND860 billion from these moves.

The airline has also negotiated cancelling the receipt of four Boeing B787 and Airbus A320 aircraft; and is in discussion to receive five other new aircraft by the end of 2022 and 2023 instead of 2020 and 2021 as originally agreed.