Vietnam Air risks insolvency if state-backed loan isn’t extended

NATIONAL carrier Vietnam Airlines risks insolvency as early as July if the repayment deadline for a government-backed loan is not extended, according to a statement on the National Assembly’s website.

The airline is in a “financial crisis” because it has not yet completed refinancing efforts such as restructuring non-core investments and sales of new shares due to delays in regulatory approvals, according to the statement. The parliament’s economic committee called Vietnam Airline’s situation “urgent” and implored the legislative body to act quickly.

Vietnam Airlines received four trillion dong (S$213 million) in low-cost loans from commercial banks that were refinanced at 0 per cent interest by the central bank in 2021.

The government recommended the parliament to allow three loan repayment extensions to Dec 31, 2027, to give the airline time to complete its restructuring, the statement said.

Vietnam Airlines is targeting an after-tax profit of 4.2 trillion dong this year after posting a loss of 5.6 trillion dong in 2023, news website ZNews reported Jun 21.

The company will focus on restructuring its assets, capital, investment portfolio and organisational structure as well as corporate governance reforms, chairman Dang Ngoc Hoa said on Jun 24. The “primary goal” is to reduce losses and balance revenue and expenditures in 2024, Hoa said. BLOOMBERG