Bamboo Airways expects profits to take off in 2020
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Private budget airline Bamboo Airways says it expects profits in the first quarter next year as its fleet expands to 30 aircraft.
The carrier’s deputy chairman Dang Tat Thang said at a press conference Tuesday that it was operating 20 aircraft with over 100 trips a day, but an airline typically needs to operate at least 25-30 jets.
“We hope that by having 30 aircraft in the first quarter next year we will record profits. By expanding our fleet to 30, we can stabilize operations and launch more routes.”
The airline had recorded cumulative losses of VND329 billion ($14.2 million) at the end of April, three months after its first flight, according to the Ministry of Finance.
Bamboo Airways chairman Trinh Van Quyet explained the losses at a shareholders’ meeting in June, saying the airline had to pay salaries for a team big enough to operate 30 aircraft, while the fleet was just 10 then.
Quyet also expects profit from its direct U.S. flights. The airline is set to receive its first wide-body Boeing 787-9 Dreamliner this month, which will be used for direct flights to the U.S. in late 2020 or early 2021.
Bamboo Airways is in the process of selecting an U.S. airline partner for its direct route, Thang said Tuesday. It is also mulling direct routes to Germany and the Czech Republic.
The airline plans to launch an initial public offering next year to raise around $100 million. It is eyeing investors from Japan, the U.S., and Europe, he added.
Foreign investors can own up to 34 percent of a Vietnamese airline, according to a government decree set to take effect January 1, 2020.
The entrance of Bamboo Airways earlier this year has eaten into the market share of national flag carrier Vietnam Airlines and budget carrier Vietjet.
Questions & Answers
Q.What is the primary reason Bamboo Airways expects to achieve profitability in early 2020?
What is the primary reason Bamboo Airways expects to achieve profitability in early 2020?
The airline expects to become profitable by expanding its fleet to 30 aircraft. This larger fleet size will allow them to stabilise operations and launch more routes, which is crucial for financial success.
Q.Why did Bamboo Airways record cumulative losses in its initial months of operation?
Why did Bamboo Airways record cumulative losses in its initial months of operation?
The cumulative losses occurred because the airline had to pay salaries for a team large enough to operate 30 aircraft, even though its fleet initially comprised only 10 jets. This led to high overheads relative to operational capacity.
Q.What steps is Bamboo Airways taking to prepare for its planned direct flights to the U.S.?
What steps is Bamboo Airways taking to prepare for its planned direct flights to the U.S.?
Bamboo Airways is set to receive its first wide-body Boeing 787-9 Dreamliner this month, which will be used for the U.S. flights. The airline is also in the process of selecting an American airline partner for this direct route.
Q.What is the maximum ownership stake foreign investors can hold in a Vietnamese airline?
What is the maximum ownership stake foreign investors can hold in a Vietnamese airline?
Foreign investors are permitted to own up to 34 percent of a Vietnamese airline. This new government decree is scheduled to come into effect at the beginning of January 2020.
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