Covid causes more turbulence for Pacific Airlines

"The shortfall in cash flow and large overdue debts pose the possibilities of insolvency and termination of operations," the carrier said, adding that it is seeking investors to restructure Pacific.

In 2018 and 2019, the airlines was on course to recover with profits of VND34.3 billion ($1.48 million) and VND48.6 billion against losses of VND346 billion and VND907 billion the previous two years.

Its revenues peaked at VND8-9 trillion during the period.

It posted profits of VND150 billion in January 2020, a monthly record, before Covid-19 hit the aviation industry.

"If it weren’t for Covid-19, we would have made a big profit," its chairman and Vietnam Airlines’ deputy director, Trinh Hong Quang, had said in mid-2020.

That year the budget carrier ended up with a record loss of VND2.14 trillion as revenues plummeted to VND2.6 trillion, a fourth of the previous year’s figure.

At the end of 2020 it had total assets of over VND6.6 trillion, but its equity had eroded and was in the red.

In 2021, it lost nearly VND2.31 trillion.

Restructuring

Speaking about plans to restructure its subsidiary, Vietnam Airlines said the investor selection process faced legal and other obstacles due to the fact it is a state-owned enterprise.

If no agreement is reached, its own situation would be at risk, it warned.

It plans to seek shareholders’ approval to amend a clause in its charter to allow sale of its equity to third parties at the upcoming annual general meeting.

Pacific Airlines was founded over 30 years ago after authorities approved foreign investment in the aviation industry. As a budget airline, it was expected to increase Vietnam Airlines’ penetration and competitiveness.

Vietnam Airlines owns 98 percent of the carrier, including 30 percent it got back from Australian airline Qantas in 2020.