After months of waiting for the decision, Vietnam Airlines received comforting news from the government of the country. The state approved a $520 million worth of support in the airline’s rescue plan. Following the approval, the State Bank of Vietnam would refinance the air carrier’s credit and extend its deadline.
The National Assembly of Vietnam agreed on the $520 million worth of support in the national air carrier’s rescue plan, announced by the governmental body in a statement released on November 17, 2020. Due to a significant drop in the inbound flights, the airline suffered a $463 million loss for the first nine months of 2020, reported Vietnam Airlines in the financial report released in October 2020.
To stabilize its liquidity, the flag carrier of the country would place a new shares offer worth $74 million. The National Assembly of Vietnam reportedly announced that State Capital Investment, a holding company of state-owned enterprises, would buy 85% of the new airline shares on behalf of the government.
Initially, to deal with the COVID-19 crisis, Vietnam Airlines hoped to get backing-loans from All Nippon Airways (ANA), a Japanese airline that owns 8.6% of Vietnam Airlines shares. However, ANA was not able to lend the Vietnamese carrier a helping hand as it was also dealing with its own net loss. The financial report of the first half of 2020 showed that ANA suffered a net loss reaching up to $1.8 billion.
Tran Thanh Hien, the Head of Finance and Accounting Department at Vietnam Airlines, presenting the financial results of H1 2020, said that despite air carriers worldwide were forced to sell their assets, Vietnam Airlines was “proactively seeking and taking advantage of every opportunity to increase revenue, such as promoting cargo transportation and charter flights to carry Vietnamese passengers back home and expert visitors, and selling old aircraft“.
Back in July 2020, Duong Tri Thanh, the CEO of the airline, asked the government for financial help once again as the company expected to record $690 million in negative cash flow. At the time, Vietnam Airlines was seeking to receive urgent government-backed aid of up to $518 million.