Vietnam Airlines aims to start first US flights in late October

Ho Chi Minh City

VIETNAM Airlines is pushing ahead with plans to start its first flights to the US in late October even as it seeks to mitigate losses from the virtual suspension of operations during the nation's worst coronavirus outbreak.

The carrier will use either Boeing 787 or Airbus A350 aircraft for its inaugural US route - Ho Chi Minh City to San Francisco - that will also rely on transporting cargo to offset initial low passenger demand, chief executive officer Le Hong Ha said in an interview. The route will include a refuelling stop, he added.

During the pandemic, the airline has operated charter flights to transport Vietnamese home from the US.

The national carrier, whose units include budget Pacific Airlines and Vietnam Air Services, is facing a 75 per cent drop in revenue this year compared with 2019 after a loss of about 7 trillion dong (S$414 million) in the first half of 2021 due to the Covid-19 outbreak, according to the CEO.

The government last year restricted in-bound international flights to those transporting Vietnamese returning home, key business and company experts and diplomats.

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Domestic flights, which resumed last summer after significant curbs, have again reduced since June as the virus outbreak gained strength, with barely no flights now.

The carrier, which has suffered a 55 per cent drop in the total number of domestic and international flights this year, will decide in September if it needs additional support from the government, he said. This summer, Vietnam Airlines was able to tap 4 trillion dong in government-backed low-cost loans from commercial banks.

The airline plans to raise 8 trillion dong from the sale of 800 million new shares to existing shareholders in mid-September. It is also weighing the sale of about 10 trillion dong of bonds, including convertible bonds, in the 2022-2025 period while also raising another 10 trillion dong from sales of some assets, including aircraft, and through issuing new shares, the CEO said. In order to make up for the plunge in revenue from passenger flights, the carrier has reconfigured five A350 and three A321 planes to carry cargo and plans to start a cargo unit after the pandemic, he said.

The airline has sold two A321 jets and plans to sell another nine A321 planes and six ATR-72 aircraft this year, he added.

The carrier anticipates vaccine passports for international tourists to begin in December on Phu Quoc Island.

The package would include a one-week quarantine at a resort. "We forecast travel demand in 2022 will be just about 25 per cent of 2019," he said. "This is the worst period of time in aviation history." BLOOMBERG