On a verge of bankruptcy, Vietnam Airlines aims to raise $345M
Vietnam Airlines, Vietnam's flag carrier which came into the public spotlight when the local media revealed it was on the verge of bankruptcy, plans to raise $347.8 million (VND8 trillion) to regain its position in the market.
On June 28, 2021, Vietnam Airlines announced its plans to raise additional millions by issuing around $347.8 million (VND8 trillion) worth of shares to current shareholders. The company will present its new capital boosting plan during the upcoming shareholders’ meeting which is scheduled to take place on July 14, 2021. The ailing flag carrier aims to regain its pre-pandemic position in the market as the largest charter capital airline with a total of around $96.5 million (VND22.183 trillion).
The capital boosting plan also includes the financial aid it secured on June 21, 2021, after long negotiations with three Vietnamese banks. Vietnam Airlines signed an agreement over loans reaching a total of $174.8 million (VND4 trillion) which will be used in order to cope with the impact of the ongoing pandemic and prevent bankruptcy. Three local banks, including Vietnam Maritime Commercial Joint Stock Bank, Saigon – Hanoi Commercial Joint Stock Bank, and SeABank, agreed to lend the life-saving credit package for the airline with a transition term in early July 2021.
Initially, none of the banks had agreed to drop the financial lifeline or extend any existing credit line reportedly due to a high risk for the air carrier to step into legal actions and bankruptcy over its existing unpaid liabilities.
The situation changed when Vietnam’s central bank backed up the flag carrier. Although the banks have now agreed to support the cash-strapped airline, the credit sum might not be enough to cover the losses.
In the first quarter of 2021, Vietnam Airlines reported a net loss of 4.97 trillion dongs ($215.68 million), it also estimated that it would reach around $208.7 million (VND4.8 trillion) loss in H1 2021.
To cut costs and strengthen its liquidity, Vietnam Airlines, which is 86% owned by the government, put 11 Airbus A321neo jets on sale through an auction. The term for interested buyers to bid for Vietnam Airlines’s jets has almost expired since the airline set the last date for submissions for June 29, 2021.
If the sale succeeds, the Vietnam Airline’s fleet will consist of 89 instead of 100 aircraft, including 59 Airbus A321 Family jets, 14 Airbus A350 XWBs, 15 Boeing 787 Dreamliners, and 2 ATR 72 aircraft, the Planespotters.com data showed.
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