Vietnam Airlines on the verge of bankruptcy, faces risk of legal action due to arrears

Vietnam Airlines is on the verge of bankruptcy due to mounting losses and debts in the aftermath of the COVID-19 pandemic, the country’s investment ministry said.

The listed flag carrier was said to have an estimated loss of 10 trillion dong ($435 million) in the first half of this year, while overdue debts have reached 6.24 trillion dong, according to a document from the ministry of planning and investment, dated June 14.

Banks were not extending credit to Vietnam Airlines, which was facing the risk of legal proceedings due to its great amount of arrears, wrote the document seen by DealStreetAsia, describing the company’s situation as “extremely direful”.

Vietnam Airlines’ accumulated loss by the end of the first quarter this year amounted to 14.2 trillion dong. Its debt to equity ratio was 57.8x in the quarter.

The company is selling 11 Airbus A321 aircraft through an auction, in an effort to partially pare its losses.

Vietnam Airlines is 86% owned by the government, and 8.77% owned by Japan’s ANA Holdings.

Aviation was the most seriously hit industry, the Vietnamese investment ministry said. Last year, demands for air transport services declined 34.5-65.9% compared to 2019, and aviation revenues dropped 61% on average.

“Airline businesses have almost reached insolvency, while the sector is predicted to continue to face a lot of challenges in 2021. Even if the pandemic is controlled, it’s expected that only by 2024 can the industry bounce back to the pre-COVID-19 levels,” the watchdog said.

It added that financial resources for other local airliners like Bamboo Airlines and Vietjet were also being drained. Vietjet, for instance, is seeing a 10 trillion dong shortfall for its operations, according to the ministry.

In a similar vein, in Thailand, where tourism played a large part in contributing to the country’s economy, Thai Airways is undergoing a $12.9 billion rehabilitation plan which covers the company’s 400 billion baht ($12.86 billion) debts. It was recently said to reduce its fleet size to 86 jets by 2025 from the current 103.

Thai Airways filed for bankruptcy protection and debt restructuring in May 2020.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.