Vietnam Airlines Takes Delivery Of Its First A320neo

The newest addition to Vietnam Airlines’ fleet has arrived. The first of three A320neos due has landed in Vietnam. The plane, VN-A513, comes via ICBC Aviation Leasing. It is the first A320neo across the wider Vietnam Airlines fleet. The plane will slot in alongside the airlines’ narrowbody fleet of 70 Airbus A321s.

The deal for the A320neos was signed in June 2019. At the time, Vietnam Airlines was flying high. Revenues and profits were higher than predicted on the back of an aviation boom in the country. Times were good, and Vietnam Airlines was eyeing expansion plans and further growth.

2020 put the brakes on that. Vietnam Airlines stopped flying entirely in March and April. That caused revenues to dry up, and the airline struggled to meet outgoings. By May, some of its domestic flights were back in the air. But the schedules were a fraction of what they formerly were. On the Hanoi – Ho Chi Minh route, usually one of the world’s busiest, Vietnam Airlines was operating just 23 flights per day.

Meanwhile, Vietnam Airlines’ international flights were suspended back in March. 2020 was shaping as a serious challenge for an airline that was previously growing at a rapid clip.

After earning US$4.3 billion in the 2019 financial year, Vietnam Airlines is now flagging losses around US$655 million this year.

Earlier this month, Airways Magazine had Vietnam Airlines’ chief accountant, Tran Thanh Hien saying the airline was in “really bad” financial trouble. The airline was having difficulty meeting day-to-day expenses such as salaries and ground handling fees.

The airline wants a loan from the Vietnamese Government. But Tran Thanh Hien says it’s not a loan – it’s an investment that will get paid back. Since you were asking, the airline would like at least half a billion US dollars to tide it over.

Vietnam Airlines is predominately a state-owned carrier. The Vietnamese Government has an 81.6% stake in the airline, and the Prime Minister personally oversees who gets appointed to the airline’s board. So, it’s a bit like swallowing your pride and going to have an uncomfortable chat with Dad.

Japanese airline, All Nippon Airways, also owns nearly 9% of Vietnam Airlines.

“Without the support, we will be in an extremely difficult situation at the end of August,” Vietnam Airlines CEO, Duong Tri Thanh, said earlier this month.

In fairness, Vietnam Airlines isn’t the only airline asking their respective government for financial help. Multiple airlines around the world are doing so and most devoutly promise to square up down the track.

While the Vietnamese Government hasn’t said no, it has previously expressed a desire to scale down its stake in Vietnam Airlines. They want to reduce their stake to 51%. That’s enough to maintain a controlling interest but also enough to share the pain when that rolls around.

The Vietnamese Government also appears keen to slow down the pace of aviation growth in Vietnam. They’ve already put a halt on issuing licenses to prospective new airlines until 2022. No doubt, they’ll come up with something for Vietnam Airlines. The question is, at what cost to the airline?

Meanwhile, Vietnam Airlines’ shiny new A320neo is poised to begin flying around the country. But with over half the airline’s fleet grounded, it arrives at the worst possible time.


Leave a Reply

Your email address will not be published. Required fields are marked *