Vietnam Airlines' expected loss has a significant impact on the total profits of state-owned enterprises.

Vietnam Airlines is losing money, its operations are not commensurate with its resources.

The Ministry of Planning and Investment has just reported on the production, business and investment development activities of state-owned enterprises nationwide.

Accordingly, by August 2023, the total revenue of 19 corporations and general companies is estimated at VND 1,136,621 billion (equal to 71% of the annual plan and 102% over the same period).

Some enterprises with large total revenue include Vietnam Oil and Gas Group reaching 350,525 billion VND; Vietnam Electricity Group reaching 250,000 billion VND; Vietnam Petroleum Group reaching 169,000 billion VND; Vietnam National Coal - Mineral Industries Group reaching 112,100 billion VND.

However, the Ministry of Planning and Investment frankly pointed out that, besides a number of corporations and groups with large profits, there are also a number of enterprises with heavy losses, typically Vietnam Airlines.

According to documents, in the first 8 months of 2023, Vietnam Airlines' passenger transport output is estimated at 2.02 million passengers, an increase of 8.5% over the same period; cargo transport output is estimated at 139.3 thousand tons, equal to 46.8% of the annual plan and 95.3% over the same period last year.

However, as of June 30, 2023, Vietnam Airlines' total loss was VND 1,317 billion, bringing the total loss of the entire state-owned enterprise sector to VND 33,639 billion.

More notably, according to a report by the Ministry of Planning and Investment, it is estimated that in 2023, Vietnam Airlines will suffer a sudden loss of up to 4,500 billion VND. That means in the last 6 months of the year, this unit is expected to lose an additional 3,183 billion VND, which is about 2.4 times the figure for the first 6 months of the year.

Vietnam Airlines continues to suffer heavy losses in 2023. Photo: VNA

"In the context of the general difficulties in production and business of enterprises due to the impact of the Russia-Ukraine conflict and the instability of the world economy, state-owned enterprises have basically made efforts to organize production and business, achieve the set plans, ensure major balances of the economy, and stabilize the macro economy.

However, there are some enterprises that are still making losses, and their operating efficiency is not commensurate with the resources they hold," the Ministry of Planning and Investment stated, pointing out that some corporations and general companies have negative profits, including large-scale enterprises with important roles such as Vietnam Airlines... which significantly affects the total profits of the corporations and general companies that are state-owned enterprises.

Vietnam Airlines' continuous losses, risk of losing state capital in the enterprise

Commenting on the difficulties and losses of Vietnam Airlines, Associate Professor, Dr. Vo Dai Luoc - former Director of the Institute of World Economics and Politics said that currently, the domestic market has fully recovered compared to before the outbreak, but the international market has recovered very slowly.

Adding to the "burdens" from fuel prices and some increased input prices, Vietnam Airlines is still losing money and liquidity has not improved much.

However, while other airlines such as Vietjet Air and Bamboo Airways are still doing well and determined to reduce losses and even report profits, there is no reason why Vietnam Airlines is still making continuous losses.

Like Vietjet Air, according to the first quarter 2023 business results report, the company's air transport revenue reached VND12,880 billion, an increase of 286% over the same period in 2022; profit after tax reached VND168 billion, an increase of 320%. Regarding consolidated business results, Vietjet recorded revenue and profit after tax of VND12,898 billion and VND173 billion, respectively.

"I think Vietnam Airlines should further equitize to attract Vietnamese private investors to participate in the management of this enterprise; sales, management and financial costs. At the same time, restructure the flight network, focus resources on potential routes, with the ability to consolidate efficiency," said Associate Professor, Dr. Vo Dai Luoc.

Dr. Can Van Luc - Chief Economist of BIDV, member of the National Financial and Monetary Policy Advisory Council, said that the difficulties of Vietnam Airlines were due to objective factors from the COVID-19 pandemic, causing a decrease in tourists, travel and freight transportation.

"I think that Vietnam's aviation sector will not fully recover until the end of 2025. Therefore, Vietnam Airlines' financial situation is still facing many difficulties. The possibility of cutting losses may not be until the first 6 months of 2024," said Dr. Can Van Luc.

Currently, Vietnam Airlines has not yet announced its audited financial report for 2022. This is an important report that determines the ability to continue listing HVN (Vietnam Airlines) shares. If after the audit, Vietnam Airlines still makes a loss in 2022, it will fall into the category of 3 consecutive years of losses and may be delisted from the stock exchange.

"According to securities regulations, it is likely that Vietnam Airlines will not be listed. This is a general regulation, but I think it is necessary to consider the specific characteristics of each industry and profession. The aviation industry is also recovering positively," he said.

According to Dr. Can Van Luc, Vietnam Airlines' losses put the state at risk of losing its capital, so he hopes that next year, the business situation of this enterprise will be better and can make up for it. Currently, Vietnam Airlines is receiving many supports such as tax deferrals; interest rates have been and are being reduced; and debt groups remain the same.

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