Vietnam Airlines targets profitability in 2024

Vietnam Airlines said that it will maintain the strong recovery momentum that has been building since 2023, the national flag carrier said at its shareholders' meeting on June 21.
Vietnam Airlines targets profitability in 2024
Illustrative image (Photo: VNA)

Speaking at the event, Vietnam Airlines CEO Le Hong Ha said that in 2024, the global economic and political situation would remain challenging, continuing to impact the aviation industry.

Globally, the ongoing conflicts between Russia-Ukraine and Israel-Hamas have disrupted supply chains, greatly affecting productions and economies.

Fuel prices are expected to stay high, around 104 USD per barrel, driving up Vietnam Airlines' operating costs. A 1 USD per barrel change in fuel price translates to around 230 billion VND (9 million USD) in annual cost fluctuations for the company.

Meanwhile, aerospace manufacturer Pratt & Whitney has recalled engines on A321 and A320neo aircraft, causing an aircraft shortage expected to last until 2025. This is directly impacting airlines' operating plans, recovery efforts and network expansion.

These external factors are putting significant pressure on the business operations of airlines in general, including Vietnam Airlines.

Consequently, Vietnam Airlines has set a target in its 2024 business plan of transporting an estimated 22.64 million passengers, a 7.6% increase from the same period last year, though still equivalent to only 99% of the 2019 passenger volume.

It has set a consolidated revenue target of over 105.9 trillion VND for 2024, up 113.6% over the previous year. The company aims to achieve a consolidated profit before tax of more than 4.5 trillion VND, with the parent company's profit reaching 105 billion VND.

To achieve the financial goals, Vietnam Airlines is implementing a comprehensive set of measures including ramping up revenue and income generation, as well as continuing to rigorously manage and optimise costs. The airline also plans to improve the efficiency of resource utilisation, particularly its aircraft fleet.

Notably, it intends to divest its stake in Tan Son Nhat Cargo Services JSC, which is expected to generate around 1.7 trillion VND. This additional cash flow is expected to help the parent company and the consolidated business achieve a balanced income statement in 2024, with the parent company's profit before tax reaching 105 billion VND and the consolidated profit before tax hitting 4.5 trillion VND.

If it achieves these projected business results, Vietnam Airlines is expected to maintain a balanced cash flow throughout the year. The estimated closing balance is around 517 billion VND, and the airline's short-term solvency is also expected to see a slight improvement.

However, the lingering negative impacts of the COVID-19 pandemic in previous years mean that Vietnam Airlines' overall financial position at the end of 2024 is still anticipated to be in a state of significant imbalance.

The parent company's shareholder equity is projected to be in the negative of around 8.2 trillion VND, while the consolidated shareholder equity is forecasted to be negative 17.9 trillion VND.

Vietnam Airlines is implementing a comprehensive restructuring plan focused on divesting from subsidiaries, rescheduling debt and enhancing operational efficiency through organisational changes, technology investments and digital transformation, all with the aim of addressing the negative financial impacts of the COVID-19 pandemic and gradually restoring the company's financial health.

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(Source: VNA)