Airline catering firm sees profits plunge 90 pct

By Minh Son   April 22, 2020 | 10:00 pm PT
Airline catering firm sees profits plunge 90 pct
The normally-crowded Noi Bai Airport in Hanoi is left deserted on March 18, 2020. Photo by VnExpress/Giang Huy.
Noibai Catering Services (NCS) saw its post-tax profits fall 92.4 percent to VND1 billion ($42,400) as airlines cut flights during the Covid-19 pandemic.

The catering firm’s net revenue fell nearly 30 percent year-on-year in the first quarter, to VND116.9 billion ($5 million), NCS said in its latest financial statement.

Revenue from in-flight meals, which accounts for nearly 80 percent of NCS’s revenue structure, fell 32 percent year-on-year. The company also provides other services including laundry, storage, and customs procedure support.

Although the costs of goods sold and administrative expenses fell over last year’s first quarter, it was not enough to offset revenue losses, resulting in NCS’s operating profit margin narrowing up to 10 percent compared to 17 percent the same period last year.

Since late March, all Vietnamese carriers have suspended international routes to contain the Covid-19 with many patients being those coming in the country from abroad.

The carriers have only been permitted to operate a limited number of flights between the three major cities of Hanoi, Da Nang and HCMC between April 1 and 15 following the government's directive on the prevention and control of the epidemic.

"The Covid-19 pandemic, which severely affected Vietnam and other global economies, caused significant loss of revenue to NCS in the first quarter. Its specific effect on the company’s business performance in 2020 will depend on how long the pandemic lasts," NCS management said.

Noibai Catering Services JSC was the first firm to provide in-flight meals to airlines using Hanoi’s Noi Bai Airport beginning from 1978, when the airport began operating commercial flights. In 2004, the state-owned firm was equitized, with national carrier Vietnam Airlines holding a 60 percent stake.

Currently, Vietnam Airlines remains NCS’s biggest client, accounting for over 50 percent of the caterer’s revenue structure, according to the NCS website.

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