Vietjet positive about the financial recovery with its LCC model


New Delhi, August 3, 2020 – Vietjet Aviation Joint Stock Company (HOSE: VJC) reported its business result of 2020’s second quarter, the period that saw the most impact by Covid-19 pandemic. The carrier operated a flight network of 52 domestic routes with 14,000 flights and transported more than two million passengers during the quarter. With its proactive measures, cost optimization and LCC model, the airline’s results in air transportation business and financial activities are considered positive, making it one of the very few airlines in the world to cope well with the Covid-19 pandemic and confident about its financial recovery.

By the end of Q2/2020, amid the Covid-19 pandemic, Vietjet recorded the air transport revenue at VND1,970 billion (approx. US$84.5 million), a decrease of 54% year-on-year, and a loss of VND1,122 billion (approx. US$48 million). For the first six months of the year, the airline’s loss in air transportation business stands at VND2,111 billion (approx. US$90.5 million), which is considered a modest number compared to the total loss of over US$84 billion for the global aviation industry.

To support the cash flow, Vietjet has proactively sought for partners and implemented many financial solutions such as asset transfer and financial investment, which resulted in a financial revenue of VND1,174 billion (approx. US$50.4 million) with a post-tax consolidated profit of VND1,063 billion (approx. US$45.6 million) in Q2/2020 and a consolidated profit of VND73 billion (approx. US$3.2 million) in H1/2020, increasing the financial resource for the airline’s air transport business.

Aiming to become a new-age carrier, Vietjet always steps up on carrying out commercial solutions based on 4.0 technology platform and mobile application development. Thanks to its tech-based cost optimization capacity, the airline has seen an effectiveness when following LCC model, which has been proven to be the right choice for the past economic crises. Vietjet has been proactively implementing cost-saving measures with an average cost drop of 55% due to operation capacity reduction of 30%-35% and service cost decrease around 20%-25%.

As Vietnam opened its sky for domestic operation, Vietjet resumed its entire domestic flight network with 300 daily flights in June, a triple to five times growth compared to daily flights at the country’s Covid-19 pandemic peak. The airline also launched eight new routes to meet rising domestic travel demand, increasing its total domestic flight network to 52 routes with overall flight operated reached 14,000 flights. Its total passenger carriage reached 1.2 million passengers in June, marking a positive recovery for the domestic market.

The airline’s total asset is VND48,392 billion (approx. US$2.075 billion) with the owner’s equity being at VND17,339 billion (approx. US$745 million) including treasury shares. Its current liquidity is kept at a good rate of 1.4 while debt to equity ratio is 0.57, which are among the lowest rates in the global aviation industry. It allows Vietjet to proceed with its long-term financing plan in order to enhance its internal resources for fighting the current pandemic.

Being active on measures to weather Covid-19 pandemic, Vietjet has implemented many solutions since early 2020, including expanding the cargo transportation business, developing SkyBoss product and ancillary services, offering “Power Pass”, the unlimited flight pass, etc. In particular, Vietjet has also worked on many solutions to increase revenue and optimize operations. It has boosted cargo transport service since April, being the first airline in Vietnam to gain the government’s approval to deploy cargo operations in the passenger cabin (CIPC).

Apart from the effort of the airline itself, the support of Vietnam government is also anticipated to reduce the pressure and boost the aviation recovery. Following the Vietnamese airlines’ proposal, the Government and industry authorities are in consideration of aviation support packages, including exemption of taxes, fees, aviation services, environmental tax exemptions for flight fuels, financial assistance, extension of payment term, etc. These supports should be urgent and specific amid the tough situation to strengthen domestic carriers’ resources. All over the world, airlines are strongly supported by local governments to recover from the devastating impacts of the pandemic as it is the crucial sector to stimulate economic development.


Please enter your comment!
Please enter your name here