Private airlines ask for zero-interest loans

Illustrative photo (Source: VNA)

Hanoi - Private airlines have requested access to 0 percent interest loans, similar to the support Vietnam Airlines (VNA) - the country's flag carrier - is entitled to, heard a meeting among the State Bank of Vietnam (SBV), commercial banks and the airlines.

The airlines have had to pay more than 100 billion VND (4.4 million USD) every day while 80-90 percent of their fleets were grounded, according to Bui Doan Ne, Vice President of the Vietnam Aviation Business Association (VABA).

During the first half of the year, demand for air travel fell by 60-70 percent compared to the pre-pandemic level. Since the end of May, sales have plummeted by 80-90 percent, said the airlines.

"COVID-19 has effectively put a stop to most, if not all international routes and it may take years for the airlines to recover," Ne said.

"That's why we are asking the banking sector to provide privately-owned airlines with 0 percent interest loans in the amount of 4 trillion VND over a three-year term. In addition, the airlines ask to apply for the State's support loan package of 25 trillion VND on 3-4 year terms," he said.

Short-term debts due for payment among the three largest airlines have reached a total of 36 trillion VND with VNA alone accounting for 20 trillion VND.

VABA has asked banks for loans worth 30 trillion VND, of which 10-12 trillion VND allocated to VNA, 10 trillion VND to Vietjet, 5 trillion VND to Bamboo Airways, 5.7 trillion VND to Pacific Airlines and 1 trillion VND to Vietravel Airlines.

Tran Thanh Hien, VNA's head of accounting, called for a comprehensive policy to support the airlines which includes relaxed rules on collateral, reduced interest rates and payment deadline extension, among others.

"As of now, no airline is capable of surviving the pandemic without ample support from the Government, their shareholders and partners," Hien said.

A representative from Bamboo Airways asked the banks to extend their interest rate cut until the end of 2022 while allowing airlines access to new loans.

Nguyen Thanh Tung, Deputy General Director of Vietcombank (VCB) - one of the largest commercial banks in the country - said to date it has provided the airlines 16 trillion VND in credit at a preferential interest rate.

"We are willing to support the airlines. However, we must ask the SBV to give us more credit room. As of now, we have reached our limits and are unable to grant large loans," said Pham Quoc Thanh, General Director of HDBank.

SBV Deputy Governor Dao Minh Tu said the government views the airlines as a pillar of the economy. The SBV will consider the banks' request to raise their credit limit.

Meanwhile, the SBV is to work together with the Ministry of Planning and Investment, the Ministry of Transport and the Ministry of Finance to build a support package for the airlines.