Vietnam Airlines wipes out debt, posts record profit in Q1

Vietnam Airlines concluded the first quarter with a record net profit of over $179 million, putting an end to a streak of 16 consecutive quarters of losses.

In the first three months of the year, Vietnam Airlines recorded nearly $1.17 billion in net revenue and nearly $170.83 million in gross profit, marking respective increases of 19 per cent and 108 per cent compared to the same period last year.

This also marks the highest gross profit quarter to date for the national airline since its transition to a JSC in 2015. Additionally, the high gross profit margin nearly doubled on-year, reaching 14.6 per cent.

Vietnam Airlines attributed its profit to the debt write-off resulting from the agreement to return leased aircraft by its subsidiary Pacific Airlines, as well as fines collected.

Previously, Pacific Airlines announced the temporary suspension of operations from March 18 due to the lack of aircraft. The airline successfully cleared $220 million in debt with aircraft lessors. In return, the airline returned all aircraft currently in operation in Vietnam.

The revenue surge in the first three months of the year for Vietnam Airlines coincides with the peak business period in the aviation industry, driven by increased travel demand. Domestic flight ticket prices remained high due to the scarcity of aircraft. At this point, Vietnam Airlines has restored its entire domestic flight network and most international routes compared to 2019, and has opened new routes.

Vietnam Airlines witnessed a significant boost in business activities during a period of aircraft shortages in the aviation market, with high demand for domestic flights during peak Lunar New Year holidays driving up ticket prices, alongside a decline in Bamboo Airways' market share.

The Vietnamese aviation industry has two peak periods, Lunar New Year and summer, to compensate for other low seasons, Le Hong Ha, CEO of Vietnam Airlines told VietnamPlus. "During peak periods, airlines often have the opportunity to sell tickets at optimal prices. For the summer of 2024, Vietnam Airlines will apply pricing at optimal levels according to state-set ceiling prices, as regulated by the Ministry of Transport," Ha added.

Additionally, the return of international routes has contributed to the positive business outlook for Vietnam Airlines. In the first quarter, international flights accounted for 65 per cent of the total aviation transportation revenue.

In particular, the airline has improved service quality and digitised its operations, thereby attracting high-income passenger segments. Vietnam Airlines carried over 5.74 million passengers in the first quarter, a growth of 12.7 per cent compared to the same period last year. The flight occupancy rate of Vietnam Airlines is 86 per cent for the domestic market and 80 per cent for the international market, both increasing compared to the same period last year.

In Vietnam Airlines' business landscape, revenue from the international market has shown strong recovery, reaching over $575 million, a 30.4 per cent increase compared to the same period last year.

Investors may have already perceived positive signals even before the announcement of the huge profit report. HVN stock prices have continuously risen since late 2023, reaching nearly a 60 per cent increase to 72 US cents per share.

However, despite the first quarter results, Vietnam Airlines' equity capital remains negative at over $500 billion, with accumulated losses decreasing to over $1.53 trillion.

Hazy Tran

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