National air carrier Vietnam Airlines said it would miss its business targets for this year due to increased competition from other carriers in the domestic market.

The airline has asked the Ministry of Transport to adjust the company's business targets due to business difficulties during the first seven months of the year.

Vietnam Airlines forecasts profits of nearly 69 billion VND (3.3 million USD) after tax for the year, more than 300 billion VND (14 million USD) less than expected, or about 20 percent of their 2012 target.

Its total revenue is estimated to be about 52 trillion VND(2.4 million USD), down by about 2.4 trillion VND (114 million USD), or 4.6 percent of their target.

Vietnam Airlines chairman Pham Viet Thanh said the carrier only earned about 13 billion VND (0.6 million USD) in profit during the first five months. The first five-month revenue is only 21 trillion VND (1billion USD), or about 39 percent of the year target.

He said the airline had to reduce air fares and flights during the period due to less than expected demand.

About 78 percent of tickets had been sold during the first five months, which is nearly 3 percent lower than targeted and also lower than the same period last year.

Even in July, the peak tourism month of the year, the revenue earned from the domestic market decreased by 2.5 percent compared to the same period last year and is far short of the target.

The airline blames fierce competition from new comer Vietjet Air as one of the reasons for the missed targets due to a loss of market share, especially for the two major routes from Hanoi to HCM City and from HCM City to Da Nang.

Another factor is that Vietnam Airlines will have to spend up to 6 million USD to establish a reserve fund after its merger with Jetstar Pacific in February, he said.

The missed targets may make it difficult for Vietnam Airlines to reach its target of earning at least 200 million USD after launching its initial public offering (IPO) slated for no later than the end of 2013.-VNA