Vietnam Airlines currently has a debt of up to VND6.24 trillion ($267 million) and is expected to lose up to VND10 trillion in the first 6 months of 2021.
The national airline of Vietnam (Vietnam Airlines) is facing legal lawsuits because of its high amount of overdue debts and the risk of bankruptcy, according to the latest draft report of Vietnam’s Ministry of Planning and Investment on business development in 2020 and the first 5 months of 2021.
Vietnamese media, including Tuoi Tre, VNExpress, and Zing News, cited this report as saying that aviation is a group of businesses with a serious revenue drop because of the impact of the COVID-19 pandemic, with demand for air transport decreased by 34.5-65.9% in 2020, causing the revenue of enterprises in this industry to decrease by 61% compared to the previous year.
This situation is even worse for nearly the first half of 2021. Just when Vietnam faced the third outbreak of the virus during the Lunar New Year, the revenue of the airline industry decreased by 80% compared to the same period last year.
The report of the Ministry of Planning and Investment also warns about the bankruptcy risk of major domestic airlines, of which Vietnam Airlines has a currently payable debt of up to VND 6.24 trillion and is expected to lose about VND4.8 trillion in the first quarter of 2021, possibly up to VND10 trillion in the first 6 months of the year.
“Vietnam Airlines is facing the risk of legal proceedings with too high arrears and the risk of not being able to repay the due short-term loans at banks,” the report said.
According to the Ministry of Planning and Investment, Vietnam’s national carrier is on the verge of bankruptcy because banks have not seen the government’s support package of VND12 trillion for this airline, so they do not allow Vietnam Airlines to further disburse or not renew credit limit extension.
In addition to Vietnam Airlines, other private airlines such as Vietjet Air, Bamboo Airways… are also falling into a state of solvency decline and “closer to the limit of insolvency“, despite their best efforts. optimize exploitation and maintain production and business through the transfer of assets in 2020, according to the MPI.
The ministry said that if Vietnam can control the COVID-19 epidemic, it will not be until 2024 that the aviation industry can recover as before.
In addition to aviation, tourism is also an industry that has suffered heavy losses because of the COVID-19 epidemic.
The report of the Ministry of Planning and Investment said that up to 90% of tourism businesses, restaurants, and hotels in Vietnam had to stop operating, the remaining 10% are only “moderately active.”
In addition, the COVID-19 epidemic also caused Vietnam’s textile and garment industry to grow negative 10.5% for the first time in 25 years, with textile and garment export turnover reaching only $35 billion in 2020, down $4 billion compared to 2019.