An aircraft of Vietnam Airlines (Photo: VNA) Hanoi (VNS/VNA) - Dragged by the impact of the COVID-19 pandemic, thenational carrier Vietnam Airlines is seeking measures to ease pressure on itscash liquidity.
According to CEO Duong Tri Thanh, Vietnam Airlines may face a liquidityshortage starting in September and a drop of 50 trillion VND (2.16 billion USD)in revenue this year.
After record profit made in 2019 and positive profit growth in the past 10years, Vietnam Airlines may suffer a net loss of 13 trillion VND though theaviation firm has applied measures to cut costs.
To ease the impact of COVID-19, the company had cut 1.7 trillion VND worth ofsalaries, 24 trillion VND worth of operation expense and 1.7 trillion VND worthof monthly fuel purchase, Thanh said.
In addition, the company had negotiated with lenders to reschedule debts, worth1.94 trillion VND, he said.
Vietnam Airlines had also proposed its Japanese investor All Nippon Airways(ANA), which owns an 8.6 percent stake, provide cash package to ease pressureon its cash liquidity, the CEO said.
ANA had to borrow 10 billion USD to fund its own activities, so the Japanesepartner was unable to help Vietnam Airlines, Thanh said.
According to experts and specialists, those measures are only short-termsolutions and it would not help the aviation firm completely remove obstacles.
In the long term, the Government needs to provide cash stimulus for the firmand beneficial policies to boost its performance, they said.
TheGovernment, through the State Capital Investment Corporation (SCIC), is thelargest shareholder at Vietnam Airlines, holding more than 86 percent of thecapital.
Thus, Vietnam Airlines wantsSCIC to inject cash into the company. But SCIC is uncertain about the deal,saying the investment may not expand in the future.
According to SCIC, the twosides have sat with each other several times but there are some issues thatneed more time to be settled.
As a financial investor, SCIC wants to study the case, evaluate and conduct duediligence reports. Those may take SCIC six to nine months to complete theevaluation process and that may not meet Vietnam Airlines’ expectations.
As Vietnam Airlines reported a loss in the first quarter of the year, it willbe unable to sell additional shares to raise capital, SCIC warns. “If thecompany still wants to do so, the directors must acquire the approval of theNational Assembly.”
SCIC also wants some special policies if it is permitted to inject cash intoVietnam Airlines and Vietnam Airlines needs to prepare an overall, transparentand clear plan on how to use the cash to save its business.
The Government needed to keep executing its policies on tax cuts and exemptionsand give priority to Vietnam Airlines, economic specialist Ngo Tri Long said.
The Government may also allow aviation firms to borrow low-interest money frombanks to fund their operation and the Government could provide additional aidusing the central bank’s reserves, he said.
As the global airlines industry faces difficulties caused by COVID-19, it wasnormal that the Government injects cash into local firms as other governmentsdo to keep companies from bankruptcy, Truong Thanh Duc, chairman of the boardof members at law firm Basico, said.
The Government and ministriesalso had to remove barriers in policy making, he said, adding if the measureswere implemented now, Vietnam Airlines may recover quickly./.
VNA
