Vietjet Aviation JSC (HSX: VJC) has announced its business results for the first half of 2020, audited by PwC, seeing a VND10.970 trillion ($477 million) in consolidated revenue, a decline of 55 per cent on-year. The airline’s post-tax consolidated profit stood at VND47 billion ($2 million).
|Vietjet weathered the global health crisis better than most airlines in the world |
Air transportation, Vietjet's core business which was stricken hard by the COVID-19 pandemic, recorded VND9.228 trillion ($401.22 million) in revenue in the first half of the year, a decrease of 54 per cent on-year. However, this was still below the average losses of over 80 per cent of other airlines in the world. Its loss for air transportation activities was recorded at VND1.44 trillion ($62.6 million), which was lower than expected by VND670 billion ($29.13 million). This was regarded as a positive result compared to other fellow carriers in the world under impact of the global pandemic.
Challenged by a decrease in cash flows from the air transportation business, Vietjet took initiatives to transfer its investment portfolios and a number of assets to shore up its capital and cash as well as to keep the business afloat in preparation for the resilience of the aviation industry.
The airline’s total assets are VND46.317 trillion ($2 billion) with the owner’s equity being at VND17.313 trillion ($752.7 million), including treasury shares. Its current liquidity remains 1.1 while debt to equity ratio is staying as low as 0.57, which are among the lowest in the global aviation industry. This allows Vietjet to proceed with its mid- and long-term financing plans in order to strengthen its financial position.
As soon as the domestic market was reopened, the carrier immediately resumed all of its domestic routes with 300 flights daily in June 2020, a growth of three to five times of those recorded during the country’s pandemic peak. Vietjet also launched eight new routes to meet the rising domestic travel demand, increasing its total domestic flight network to 52 routes with overall flights operated reaching 14,000. The airlines carried up to 1.2 million passengers in June alone, marking an impressive recovery for the domestic market.
Vietjet has been actively implementing cost-saving measures with an average cost drop of 55 per cent due to operation capacity reduction of 30-35 per cent and service cost decrease of around 20-25 per cent. In May, Vietjet stocked up on fuel reserves when prices were low, leading to a cost reduction of 25 per cent compared to the market price.
|Vietjet bounced back in force, operating 300 flights a day as soon as aviation was reopened |
In response to the COVID-19 pandemic, Vietjet has carried out several comprehensive solutions since early 2020, including expanding the cargo business, developing SkyBoss products and ancillary services, and offering the unlimited flight pass Power Pass. It has boosted cargo transport services since April, being the first airline in Vietnam approved to deploy cargo operations in the passenger cabin (CIPC).
The Civil Aviation Authority of Vietnam also granted license to Vietjet to launch its own self-service ground operations at Noi Bai International Airport. It would help the carrier to be more independent in operations while reducing costs and increasing ancillary revenue as well as improving its service quality.
With comprehensive resources being well-prepared, backed by the low-cost carrier business model, Vietjet is expected to stand firm with fast recovery and robust growth once the aviation market bounces back, if the carrier is granted liquidity support like other airlines in the world.