Vietnamese airline Vietjet has announced reaching an agreement with lenders HSBC, Citibank, and the World Bank to delay the repayment of its loans.
The debt Vietjet has secured a delay and moratorium on is one it took up to purchase aircraft. This postponement could ensure temporary liquidity for Vietjet amidst a jittery market.
“Vietjet has reached agreements with domestic and international financial institutions to delay the payment for 70-80 per cent of our aircraft for 3-12 months,” Vietjet said in a statement.
The budget airline also reaffirmed its plan of slashing operating expenses by 30-70 per cent in a bid to shore up capital. Deferring loan repayment is one of the ways.
As the COVID-19 pandemic continues to spread, the global air industry is recalibrating its response to a threat that might be its worst since the financial crisis a decade ago.
“This is part of our efforts to maintain normal operations and prepare for a strong rebound when the pandemic is over,” Vietjet vice president Nguyen Thi Thuy Binh told Reuters.
Binh also said the company’s cargo volume has increased significantly during the lockdown, including transporting medical supplies.
Domestic airlines on April 15 evening announced they are increasing flight frequency between Hanoi and Ho Chi Minh City from April 16 onwards.
Vietjet plans to operate two daily flights between the two cities, one daily flight each between Hanoi/Ho Chi Minh City and Danang.
The airline made up the largest portion of the aviation market at the end of 2019 with around 42.2 per cent. However, the escalating tensions of the outbreak have pushed Vietjet into financial struggles, with the number of flights in March dropping 39.3 per cent on-year.
Investors, on the flip side, cheered Vietjet's repayment postponement, as shares soared in recent days. Vietjet's ticker (VJC) closed higher, to reach VND117,400 ($5.10) as of April 17.
Earlier this month, local aviation market was bracing to welcome its fifth player named Vietravel Airlines with the total investment of $30.43 million. The airline will be headquartered at Phu Bai International Airport (the central province of Thua Thien-Hue).
By Luu Huong