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Vietnam Airlines’ pandemic losses near $1 billion

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Despite reporting losses of almost $1 billion over the last two years and battling fresh challenges, Vietnam Airlines is firmly in recovery mode.

Hanoi-based Vietnam Airlines incurred a loss of US$570 million in 2021, bringing its accumulated losses since the pandemic began to over $928 million. The news comes as Vietnam Airlines calls for a tax break amid rising fuel prices. Despite this, the airline is getting back on its feet and is putting the worst days of the pandemic behind it – Vietnam Airlines operated 21% more flights last month than it did in March 2021.

Total accrued pandemic losses are around $970 million at Vietnam Airlines

Vietnamese newspaper VNExpress is reporting the numbers. The newspaper notes Vietnam’s long-running border closure and suspension of Vietnam Airlines’ commercial flights had a significant impact on the airline’s bottom line. Revenue last year was down 31% compared to 2020. The airline also raised a substantial amount of fresh capital last year – around $970 million, by issuing new shares. However, that sum barely covers the accrued losses over the previous two years.

Vietnam fully reopened its borders to tourists last month – good news for all of Vietnam’s airlines. As the Vietnamese Government began lifting travel restrictions, Vietnam Airlines began ramping up its flights again. In March, the airline operated 7,314 flights. However, it hasn’t been all smooth sailing lately. Vietnam Airlines is feeling some heat from the Ukraine – Russian war and rising fuel prices.

While the airline has suspended its flights to Moscow, flights to Frankfurt (FRA), Paris Charles de Gaulle (CDG), and London Heathrow (LHR) continue. But rather than the usual flight path that traverses Russian airspace, these flights are now pivoting south and overflying China, Kazakhstan, or North Africa.

Besides adding one to two hours to the travel time, it is costing Vietnam Airlines between $70,000 and $120,000 extra per week. Flights to the US also take a small deter. While only adding around 30 minutes to the flying time, those detours also add between $20,000 and $40,000 to Vietnam Airlines’ weekly operating costs.

Vietnam Airlines wants a cut in fuel taxes and an increase in passenger surcharges

Normally, fuel accounts for about 30% of Vietnam Airlines’ day-to-day operating costs. But the price of jet fuel has skyrocketed this year. Singapore jet fuel was selling for over $143 per barrel on the weekend. Vietnam Airlines has already asked Vietnam’s aviation authorities for permission to start charging passengers a fuel surcharge. The airline also wants the Vietnamese Government to scrap its jet fuel import tax and cut the environment tax.

Vietnam charges a fuel import tax of 7% and an environmental tax of about six cents per liter. Vietnam Airlines says cutting these taxes would save it more than $26 million a year.

Despite these hurdles, Vietnam Airlines is now flying to almost all destinations it flew to before the pandemic. Last month, the airline indicated it wanted to start expanding its fleet again and began hiring pilots, flight engineers, and cabin crew again. A Vietnam Airlines’ 787 Dreamliner Captain can now trouser a tidy $13,300 per month while narrowbody Airbus and Embraer Captains earn over $10,400 per month.

With the Vietnamese holiday period looming this month, the Vietnam Airlines Group is firmly in recovery mode. The airline group (which includes Pacific Airlines and VASCO) will offer close to 750,000 seats and 4,000 flights over the holidays -10% more seats than offered during the equivalent 2019 period.

By Andrew Curran – SimpleFlying.com – April 4, 2022

Vietnam Airlines’ pandemic losses near $1 billion
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