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Vietnam Airlines Expects $655 Million Yearly Loss
As a result of the COVID-19 pandemic, Vietnam Airlines posted a $284 million loss in the first half of 2020 and expects its loss could reach $655 million by the end of the year. The airline recorded a remarkable year in 2019 and earned $4.3 billion.
Vietnam has prevented the spread of coronavirus successfully as the country implemented strict policies following the identification of COVID-19 cases in the country in March. The country lifted the restriction on Apr. 23 and 90 percent of domestic flights were soon back to the skies.
However, the pandemic is far from over as the second wave of coronavirus were impacted Da Nang, the popular tourist hotspot in the country, per vnexpress.
“The second wave has not shut down Vietnam Airlines’ intentions to recover its business, but it has put more roadblock on its path,” Duong Tri Thanh, the Vietnam Airlines chief executive said. The virus resulted in a drastic drop in domestic travel demand.
The government is Vietnam Airlines’ majority shareholder with an 86% stake, and All Nippon Airways holds nearly nine percent. Earlier, the national flag carrier expected a full recovery by 2022, but it pushed back the date since the virus resurfaced. Thanh also forecasted that domestic passenger numbers will drop 30% year-over-year in the last five months of the year.
Vietnam Airlines Adapts
In response to the decrease of passengers, Vietnam Airlines announced that it has stepped up cargo transportation, VietReader reports. Cargo services have become the main source of income during the pandemic for many airlines, and Korean Air, Japan Airlines and EVA Air’s latest financial reports also revealed the necessity of the freight business.
“We take advantage of support from support the Government and partners to maintain production and business activities, overcome the crisis and prepare resources for the recovery and development,” Pham Ngoc Minh, Vietnam Airlines’ said.
In the meantime, Vietnam Airlines is going to suspend services to Europe and Australia in the near future, but it is set to resume Northeast Asia and Southeast Asia services in October.
The airline is seeking a $520 million government bailout package.
“Without the support, we will be in an extremely difficult situation at the end of August,” Thang said.
Meanwhile, the airline is aiming to cut costs, according to local media. Pilots, cabin crew and ground staff have experienced a nearly 50% pay cut.
Earlier, the Vietnamese government announced that no new airline will be allowed to launch in the country until 2022. The policy was believed to ensure that the aviation industry can develop sustainably in the future.
“In the most optimistic scenario, only in 2022, the local aviation market could reach the result it did in 2019,” said Nguyen Van The, Vietnam’s Minister of Transport.
According to the Vietnamese government, Vietnam has 214 aircraft, less than half of which are in use at the moment.
This story was updated on Thursday, Aug. 13, 2020 at 2:45 p.m. ET to correct an error that said Vietnam Airlines had 214 aircraft, when rather the Vietnamese government does.
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