Vietnam Air risks insolvency if loan deadline isn’t extended

National carrier Vietnam Airlines JSC risks insolvency as early as July if the repayment deadline for a government-backed loan isn’t extended, according to a statement on the National Assembly’s website.

The airline is in a “financial crisis” because it hasn’t yet completed refinancing efforts such as restructuring non-core investments and sales of new shares due to delays in regulatory approvals, according to the statement. The parliament’s economic committee called Vietnam Airline’s situation “urgent” and implored the legislative body to act quickly.

Vietnam Airlines received 4 trillion dong ($157 million) in low-cost loans from commercial banks that were refinanced at 0% interest by the central bank in 2021. 

The government recommended the parliament to allow three loan repayment extensions through Dec. 31, 2027 to give the airline time to complete its restructuring, the statement said.

Vietnam Airlines is targeting an after-tax profit of 4.2 trillion dong this year after posting a loss of 5.6 trillion dong in 2023, news website ZNews reported June 21.

The company will focus on restructuring its assets, capital, investment portfolio and organizational structure as well as corporate governance reforms, Chairman Dang Ngoc Hoa said in an emailed statement June 24. The “primary goal” is to reduce losses and balance revenue and expenditures in 2024, Hoa said.