Carriers in dire straits and need support

Vietnamese carriers are confronting major financial challenges as revenues plunge and debt soars. They need urgent government intervention to improve their cash flow, a report says.

Since Covid-19 entered the country early last year, airlines revenues have plunged by 80-90 percent, according to a recent report by the Vietnam Aviation Business Association (VABA).

National flag carrier Vietnam Airlines posted a loss of nearly VND5 trillion ($219 million) in the first quarter, the highest quarterly loss ever, and the Ministry of Planning and Investment has said that the company is on the verge of bankruptcy.

Budget airline Vietjet is short of VND10 trillion to cover its expenses, and startup airline Bamboo Airways shares the predicament.

The VABA report proposes that the government extends its support on airlines’ loans to include those registered since June 10 last year.

The current support, including a delay in payment and a reduction in interest, only applies to loans recorded before that date.

The report also proposes that the support lasts for three to six months after the government announces that the Covid-19 pandemic has ended or the country turns to “a new normal.” The carriers need time to recover after the pandemic has been contained, the report says.

In the first seven months of this year, Vietnamese carriers served 13.7 million passengers, down 32 percent year-on-year, according to the General Statistics Office.