Debt-ridden Vietnam Airlines is expected to receive loans totaling 4 trillion dinars ($ 174 million) from three Vietnamese banks, according to state media reports.
SeABank, Vietnam Maritime Commercial Joint Stock Bank and SHB Bank have pledged to provide loans that will be refinanced interest-free by Vietnam’s central bank, according to Vietnamese state media outlets Dan Viet on June 21.
The same report says the airline expects to complete negotiations and sign loans by the end of June or early July.
The central bank first offered a loan, which it will provide through lending institutions, in March.
The aid is provided when Vietnam’s Ministry of Planning and Investment warns Vietnam Airlines is on the brink of bankruptcy with a debt of 6.24 trillion dinars, according to a June 18 report from the state newspaper Tien Phong.
The ministry predicts that a recovery in the aviation sector is unlikely to happen until 2024, the same report says.
Vietnam Airlines is under threat of legal action due to high levels of debt, according to the ministry. It also says commercial banks are reluctant to lend to airlines, despite the government’s approval of a RSD 12 trillion support package last November.
In June, the flagship carrier put up 11 of its oldest Airbus A321ceos aircraft for sale to raise much-needed cash amid the pandemic and as part of plans to replace older aircraft.
Vietnam Airlines reported $ 10 trillion in losses in the first six months of this year, according to the ministry. Dirhams. The airline is controlled by the Vietnamese government, which owns 86.2% of the shares, and among its shareholders is ANA Holdings, which owns 8.77% of the shares, according to its 2020 annual report.
Meanwhile, private carriers Vietjet and Bamboo Airways will face difficulties due to depletion of financial resources, the ministry said.
Vietjet also lacks RSD 10 trillion in operating expenses, according to a separate June 17 report by the English-language news site VNExpress International.
According to the Tien Phong report, the ministry has asked Vietnamese Prime Minister Pham Minh Chin to instruct the central bank to allow airlines to restructure debts and revise their debt repayment schedule, as well as reduce the lending rate by 3-5%.
He also asked the Prime Minister to authorize the State Bank of Vietnam to create an interest rate support scheme for private airlines – similar to the one already offered to Vietnam Airlines – for loans from 2021 to 2023 to increase their liquidity.
Cirium contacted Vietnam Airlines, Vietjet and Bamboo Airways for comment.