Vietnam Airlines plans to sell off aircraft to save losses

Vietnam Airlines are planning to sell nine planes as the company is facing big losses due to Covid-19 outbreak.

Vietnam Airlines are planning to sell nine planes as the company is facing big losses due to Covid-19 outbreak.

 

Vietnam Airlines plans to sell off aircraft to save losses

During the current outbreak, Vietnam Airlines reported that they may suffer a loss of VND15trn (USD645m) in 2020. In the financial report, Vietnam Airlines announced that they will be able to operate only 14.5 million flights this year, a 36.8% decrease compared to last year. The carrier will carry 2 million international passengers and 12.3 million domestic passengers.

Revenue for 2020 is estimated at VND40.6trn (USD1.7bn) or 40.5% of 2019's revenue. The mother company alone will suffer losses of VND14.4trn and a revenue fall of 56.4%. The data excluded unsuccessful activities like when they failed to sell two Airbus 321s in June and six Airbus 321s in late 2020.

The pandemic has depleted cash flow and caused huge losses. As a result, Vietnam Airlines said they have applied various measures to cut costs, negotiate with EU export credit agency and local banks. They have also asked the government to provide support to overcome the difficulties.

Moreover, Vietnam Airlines must carry out asset restructuring to release a portion of excess resources. The initial plan is to sell six Airbus 321 CEOs made in 2007 and three Airbus 321 CEOs made in 2008 during the 2023-2024 period. The plan will be now carried within the next year. They will rent out the planes if revenue proves to be higher.

Due to Covid-19, Vietnam Airlines Group’s fleet has excess capacity. They will have 25 planes redundant in the last six months and six planes redundant in 2021.

They will not pay dividends and keep the profits which haven't been distributed yet from 2019 to maintain business operations.