Numerous industry giants have reported unprecedented financial results, marked by soaring figures that have not been seen before. However, despite these promising developments, persistent concerns regarding financial structure remain unresolved in the short term.
Vietjet Air, a major player in the aviation sector, has recently released its audited semi-annual financial report, showcasing impressive revenue and profit growth. Consolidated figures reveal that Vietjet achieved over VND 34,000 billion in revenue and more than VND 1,000 billion in pre-tax profit for the first half of 2024, representing a 15% and 307% increase, respectively, compared to the same period last year. Specifically, revenue from air transport alone reached over VND 33,860 billion, with pre-tax profit soaring to VND 1,166 billion—nearly seven times higher than the previous year.
According to the latest assessment by Saigon Ratings, Vietjet maintains a long-term credit rating of vnBBB- with a "Stable" outlook. The airline is recognized for its significant recovery over recent months and is expected to develop rapidly and sustainably in the medium to long term, driven by growth potential in cargo transport and, notably, international passenger services.
Conversely, Vietnam Airlines, the national flag carrier, has recently reported positive results after a prolonged period of financial losses spanning four consecutive years. For the first half of the year, Vietnam Airlines recorded a net revenue of VND 52,560 billion, with a post-tax profit exceeding VND 5,400 billion, a stark contrast to the VND 1,386 billion loss reported in the same period last year. The substantial profit increase is attributed to a rise in service revenue, the full restoration of domestic flight networks, the resumption of most international routes, and the addition of new routes.
Beyond the parent company, Vietnam Airlines' subsidiaries have also turned a profit. Notably, the company reported a significant increase in other consolidated income, due to a debt forgiveness agreement with Pacific Airlines concerning aircraft payments. The ongoing restructuring plan for Vietnam Airlines, covering the period 2021-2025, aims to address the negative consolidated equity situation through a comprehensive set of measures.
Similarly, Airports Corporation of Vietnam (ACV) has announced a striking semi-annual performance, with profits reaching record highs. Noteworthy is ACV's gross profit margin, which surged to over 60%. Revenue reached VND 11,178 billion, a 16% increase, with net profit climbing to VND 6,148 billion, up 45% compared to the previous year. This growth was driven by both aviation and non-aviation services, with aviation services increasing by VND 500 billion to VND 4,550 billion, while non-aviation services rose by VND 100 billion to VND 700 billion.
ACV attributes its impressive profit increase to a strong recovery in international passenger traffic, which surged nearly 40% in the first half of the year, despite a slight decrease in total passenger volume. Additionally, international landing and takeoff operations grew substantially by 27%, totaling over 126,700 flights. Cargo transport also made a significant contribution, with cargo and parcel volumes reaching nearly 730,000 tons, a 26% increase from the previous year. International cargo accounted for 498,000 tons, up 21%, while domestic cargo reached 231,000 tons, a 36% increase. Consequently, ACV has already achieved over 80% of its annual profit target within just six months.
Despite the positive business results, financial pressures from debt remain a significant concern for the industry’s major players. For Vietjet, Saigon Ratings highlights the substantial impact of large receivables on operational cash flow. Additionally, the company’s significant on-balance sheet and off-balance sheet debt obligations surged in 2023, with VND 9,000 billion in new bonds issued, representing over a quarter of the total financial debt. The rising interest rates on these bonds have exerted substantial pressure on the company’s capital costs in the short to medium term.
Notably, Vietjet still holds a non-performing loan of over VND 1,700 billion with ACV, an increase of VND 470 billion since the beginning of the year. The debt-to-total-assets ratio of Vietjet, adjusted, exceeds 60% and is projected to rise further to support the expansion and development of international routes. Analysts suggest that Vietjet must carefully evaluate its cash flow and the effectiveness of its strategies to mitigate the risks associated with its loans, ensuring that the fragile capital recovery is not adversely affected by uncertainties.
For Vietnam Airlines, auditor KPMG emphasizes that as of June 30, the airline’s short-term liabilities exceeded its short-term assets by VND 40,787 billion, with overdue payables amounting to VND 13,351 billion and negative equity of VND 11,633 billion. The ongoing viability of the corporation and its subsidiaries will largely depend on the extension of loan repayments from commercial banks and financial institutions, as well as successful execution of the restructuring plan currently under review by relevant authorities.
Regarding ACV, despite record-breaking operational results, the financial picture remains marred by significant concerns. As of the end of June, the corporation’s non-performing loans had nearly doubled compared to the start of the year, reaching over VND 8,256 billion. This includes notable non-performing loans from Bamboo Airways (VND 2,265 billion), Pacific Airlines (VND 880 billion), and Viettravel Airlines (VND 325 billion), all of which have been fully provisioned. At the end of the period, ACV had set aside nearly VND 3,900 billion in provisions for these debts, and this provision-to-debt ratio continues to rise quarterly, posing a significant threat to the corporation’s financial structure and growth prospects if not addressed promptly.
Source: theleader
Compiled by VietnamCredit
