Lower than expected Q1 loss shows positive sign: Vietjet Air

By Bao An, Quy Nguyen   May 7, 2020 | 04:45 am PT
Vietnamese carrier Vietjet sees positives in lower-than-expected Q1 losses of VND989 billion ($42 million), given Covid-19 impacts.

Vietjet has resumed its domestic flights.

In the first quarter, the airline operated 29,401 flights, carrying nearly 4.5 million passengers, down 22 percent year-on-year. Its air transport revenue was VND7.22 trillion ($307 million), a 29.6 percent fall. 

Despite suffering its first quarterly loss since its stock market listing in February 2017, Vietjet Air said that the figure was lower than expected and a positive sign, compared to the aviation industry as a whole.

Since the carrier has actively adjusted the aircraft delivery schedule, there has been no revenue or profit generated from sale and leaseback. Vietjet Air’s consolidated revenue and after-tax losses for the first quarter were VND7.2 trillion ($307 million) and VND989 billion ($42.2 million) respectively.

These results are positive thanks to a solid financial foundation accumulated in the previous period and timely cost management measures.

In 2019, air transport revenue and before-tax profit reached VND41.1 trillion ($1.75 billion) and VND3.94 trillion ($168 million) for respective year-on-year growth of 21.4 percent and 29.3 percent. This brought Vietjet Air's total assets to VND47.6 trillion ($2 billion) and owner's equity to VND17.7 trillion ($755 million), with treasury stocks in particular seeing an increase of 26 percent over the previous year.

The current liquidity index remained "at a good level" of 1.4, while the debt to equity ratio was 0.77, putting the carrier in the low-D/E group in the global aviation industry, according to the company.

In early 2020, the airline took the initiative in implementing a series of measures against the Covid-19 crisis, such as expanding cargo transportation services, developing SkyBoss products and auxiliary services as well as Power Pass business cards.

The airline also promoted ground self-service at Hanoi's Noi Bai airport to take the initiative in operations, increasing ancillary revenues and improving the quality of customer service.

Vietjet successfully negotiated with its lending partners an extension of payables by 3-12 months. "This would provide financial resources to focus on solutions through the pandemic period and for the carrier to stand ready to rebound when the market recovers," the representative said.

The carrier’s average operating cost has been cut by 35-40 percent over the same period last year, the rep added.

Vietjet has resumed its domestic flights as Vietnam has well-controlled the coronavirus epidemic. Government support is expected to help revive the aviation industry. Following proposals by airlines, the government is considering a stimulus package for the industry, including unlimited waiver of taxes, aviation service charges and environmental tax for fuel, financial support, and debt deferment.

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