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Vietjet Air, Bamboo Airways seek financial relief from Vietnamese government

Thursday, March 25, 2021, 10:23 GMT+7
Vietjet Air, Bamboo Airways seek financial relief from Vietnamese government
An aircraft of Bamboo Airways in seen at an airport in Vietnam. Photo: C.Trung / Tuoi Tre

The Vietnam Aviation Business Association (VABA) has recently relayed loan requests from two domestic carriers Bamboo Airways and Vietjet Air to the Ministry of Planning and Investment. 

According to VABA, Vietnamese air carriers in 2020 reported over VND18 trillion (US$776 million) in losses from air transport operations, while their total revenue shed VND100 trillion ($4.3 billion) compared to 2019.

As COVID-19-induced restrictions on international flights remain in force in Vietnam, airlines are only allowed to operate limited cross-border trips to repatriate citizens, transport experts, and ship cargo.

Domestic travel also took a huge hit, with revenue during the peak season of the Lunar New Year holiday this year, which transpired in early February, dropping 70-80 percent compared to the same period in 2019.

In order to stay afloat during the current COVID-19 crisis, Vietjet and Bamboo are renegotiating debt payment as well as rescheduling and selling assets, which in turn helped them report profits of VND70 billion ($3 million) and VND400 billion ($17.4 million), respectively, in 2020.

However, those measures might not be enough as the downward trajectory for domestic airlines is expected to continue in 2021, given that the air passenger sector is projected to suffer a VND15 trillion ($647 million) loss this year.

In light of the gloomy prospects, Bui Doan Ne, deputy chairman and general secretary of the VABA, suggested that a relief package, which grants flag carrier Vietnam Airlines a bailout fund of VND4 trillion ($173 million), to be extended for Vietjet and Bamboo.

More specifically, Vietjet petitioned for a loan of VND4-5 trillion ($173-215 million), which is to be disbursed until 2023 with an interest rate of four percent.

Meanwhile, Bamboo Airways requested a bailout package of VND5 trillion with zero interest, on top of VND5 trillion in long-term loans with favorable interest from commercial banks.

The VABA also proposed that the environmental tax on jet fuel be reduced to VND900-1,000 ($0.04-0.043) per liter, and multiple tax deadlines for airlines be extended.

Earlier, the Ministry of Finance cut the environmental tax on jet fuel to VND2,100 ($0.09) per liter from VND3,000 ($0.13) for five months, from August to December 2020.

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