National carrier Vietnam Airlines is planning to put six turbo propeller ATR 72s up for sale to replace its fleet of small jets in order to increase its competitiveness on routes to small-scale airports.
The airline’s shareholders approved the plan at the annual general meeting on Wednesday morning.
Vietnam Airlines currently owns six 12-year-old ATR 72 aircraft and leases one, the rental contract of which will expire in August 2022, according to deputy general director Nguyen Chien Thang.
The ATR 72 fleet has been operating on routes to airports that cannot receive Airbus 320 aircraft, including Con Dao, Kien Giang, Ca Mau, and Dien Bien.
The plan to sell the ATR 72 aircraft is part of Vietnam Airlines’ fleet renewal drive to gradually replace old generation aircraft with new planes.
It is expected to help the national flag carrier save costs, ensure stable operations, improve service quality, and successfully compete with other airlines.
Vietnam Airlines has been researching aircraft that can replace the ATR 72 since 2019 and has considered the Regional Jet as a suitable substitute, according to general director Le Hong Ha.
Ha added that a few years ago Vietnam Airlines had mulled over the establishment of a subsidiary which would specialize in operating cargo aircraft, but the plan was scrapped for a number of reasons, including market size, flight networks, and cargo flow between Vietnam and other countries.
As the COVID-19 pandemic has caused a major decrease in passengers in 2020 and 2021, Vietnam Airlines has removed seats on five A350 and two A321 aircraft in order to use them as cargo airplanes.
“Removing seats has allowed us to double the cargo capacity of these aircraft,” Ha said.
"It has allowed us to rehearse cargo operations should we move forward with the establishment of a cargo airline after the pandemic ends.”
In 2020, the airline chose to implement several solutions in order to successfully cut costs by nearly VND5.5 trillion (US$239.77 million), according to chief accountant Tran Thanh Hien.
The cost-cutting solutions have been continued this year with a target of lowering expenditures by at least VND6.8 trillion ($296.46 million), Hien added.
The attendees at the annual general meeting on Wednesday also approved a plan to issue shares to existing shareholders to increase capital by VND8 trillion ($348.78 million).
The new shares will have a par value of VND10,000 ($0.44) apiece, according to Vietnam Airlines chairman Dang Ngoc Hoa.
It is expected that the capital increase will be completed by the end of the third quarter of this year.
“This amount will be used to repay overdue loans at credit institutions and debts that Vietnam Airlines owes to suppliers, especially aircraft leasing firms, and to supplement Vietnam Airlines’ working capital flows to ensure future operations,” Hoa said.
The carrier has drawn up a business plan for 2021 with a consolidated revenue of nearly VND37.4 trillion ($1.63 billion), equal to 88.4 percent of that in 2020, paying the state budget over VND3.9 trillion ($170 million) and expecting a consolidated after-tax loss of about VND14.5 trillion ($632.13 million).