Risky losses in aviation industry

If the pandemic is controlled, it will not be before 2024 that the aviation industry can recover

According to the Ministry of Planning and Investment, the demand for air transport in 2020 decreased by up to 65.9 per cent, with revenues of aviation enterprises decreasing by 61 per cent compared to the previous year.

Around this year's Lunar New Year, the pandemic caused the aviation industry's revenue to decrease by 80 per cent compared to the same period in 2020.

Air transport is forecast to continue to face difficulties in 2021. If the pandemic is controlled, it will not be before 2024 that the aviation industry can recover.

Vietnam Airlines expected a loss of about VND4.8 trillion ($209.3 million) in the first quarter of 2021, and VND10 trillion ($436 million) in the first six months of the year. Currently, Vietnam Airlines' overdue debt amounts to up to VND6.24 trillion ($272 million).

The ministry supposed that this corporation is likely to be on the verge of bankruptcy. Commercial banks have not seen the government's support package of VND12 trillion ($523.24 million), so they do not allow Vietnam Airlines to further disburse funds or grant further credit limits.

Together with Vietnam Airlines, private airlines such as Vietjet and Bamboo Airways have tried to optimise their operations and maintain production and business through the transfer of assets in 2020. However, it is forecasted that they are still facing difficulties in 2021 and are gradually running out of financial resources to support air transport services.

It is estimated that Vietjet has a shortage of about VND10 trillion ($436 million) meant to maintain production and business activities.

The Vietnam Aviation Business Association said that Vietnamese airlines could lose up to VND15 trillion ($654 million) in 2021. Businesses proposed to the government to establish a credit support programme to remedy related issues.

Vietjet proposed to a credit loan of up to VND5 trillion ($218 million) in the 2021-2023 period as well as an interest rate subsidy of about 4 per cent.

Meanwhile, Bamboo Airways proposed a long-term loan of VND5 trillion with a preferential interest rate of 0 per cent and another VND5 trillion for long-term loans from commercial banks with a supportive interest rate.