VietJet navigates crisis with $3 million profit in 2020
While other air carriers worldwide report huge losses related to air travel restrictions, VietJet Aviation, a parent company of the low-cost airline VietJet, posted an after-tax profit of $11.9 million for Q4 2020.
On January 31, 2021, VietJet reported an $11.9 million after-tax profit for Q4 2020 and a consolidated after-tax profit of almost $3 million for the full year. Although its revenue dropped by almost 30% in comparison to 2019 levels due to a decreased passenger demand, the air carrier still managed to save its profitable position as its current full-year profit is only 2% lesser compared to 2019.
To stay profitable, VietJet made “drastic cuts to operating expenses” by trimming 10% of its daily operating costs and having secured up to 25% discounts with its suppliers. VietJet announced that it managed to “successfully hedge” jet fuel in May 2020. The move helped the air carrier to save an additional 25% of costs in comparison to jet fuel prices in the market. Besides, the air carrier received governmental support through taxes, including tax-payment extensions as well as reductions for air control service and landing/take-off fees.
Furthermore, VietJet has resumed its entire domestic network consisting of more than 47 routes as well as launched its Ground Services Centre at Noi Bai International Airport in Hanoi, Vietnam, to improve its “brand recognition and service quality,” as written in the airline‘s statement.
Meanwhile, the sharp jump in cargo operations also helped the airline to increase its profit. After receiving approval to deploy cargo operations using passenger aircraft, the air carrier reconfigured a part of its fleet to carry cargo goods. According to the statement, VietJet’s freight revenue jumped up by 75% in Q4 2020, while the overall cargo volumes grew up by 16% in 2020 compared to 2019.
Multiple partnership agreements with other cargo operators such as UPS also helped the airline to expand its cargo network to European countries and the U.S, making VietJet “one of the few airlines in the world having no workforce reduction and turning a profit."
In an interview for Reuters Next virtual conference on January 14, 2021, Nguyen Thi Phuong Thao, the CEO of VietJet, pointed out that VietJet was one of few air carriers with positive consolidated financial results in 2020.
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