Vietnam Airlines Reveals Strategy to Address Controlled Stock Situation

Vietnam Airlines (HVN), the national carrier of Vietnam, has recently released a statement explaining the changes in its fourth quarter 2023 post-tax profits and outlining the plan to overcome the current state of HVN being under scrutiny.

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In a letter sent to the State Securities Commission, Ho Chi Minh City Stock Exchange, Vietnam Airlines said its after-tax net loss for Q4 2023 decreased compared to Q4 2022 mainly due to a decrease in Pacific Airlines’ Q4 2023 after-tax net loss. The parent company and its subsidiaries (NCS, VACS, etc.) also reported higher profits in Q4 2023 compared to Q4 2022.

Vietnam Airlines has announced that it has completed the Restructuring Plan for the period 2022-2025, which has been reported to the shareholders and approved by the competent authorities. Photo: Duong Ngoc

In the Financial Performance Report of the parent company, total revenue and other income for Q4 2023 increased by 24.18% compared to Q4 2022, mainly due to a 28.71% increase in service revenues, equivalent to an increase of more than VND 3,952 billion, thanks to the recovery of the market and increased transportation volume (domestic revenue increased by 14.0%, international revenue increased by 49.1% compared to the same period last year).

Total expenses for Q4 2023 increased by 20.54% compared to Q4 2022, mainly due to an increase in cost of goods sold (corresponding to an increase in production volume). The faster pace of growth in total revenue and other income for Q4 2023 compared to the pace of growth in total expenses resulted in a reduction of more than VND 125 billion in after-tax net loss compared to the same period last year.

In the Cumulative Financial Performance Report for the year 2023, the after-tax net loss of the parent company was VND 4,798 billion, a 45% decrease equivalent to a decrease of VND 4,054 billion compared to the same period last year; the consolidated net loss was VND 5,517 billion, a 51% decrease equivalent to a decrease of VND 5,706 billion.

Total revenue and other income of the parent company for the whole year 2023 increased by 38%, equivalent to an increase of more than VND 19,544 billion, and consolidated revenue and other income increased by 30%, equivalent to an increase of VND 21,380 billion compared to 2022. Gross profit from sales and service provision of the parent company in 2023 reached VND 2,087 billion; gross profit of the consolidated entity reached VND 3,939 billion.

According to the leaders of Vietnam Airlines, these are positive results of the corporation in the recovery phase after COVID-19 and in the context of a business environment that still faces many difficulties and challenges.

In 2023, the corporation proactively implemented a series of short-term and long-term solutions to minimize the impact of the COVID-19 pandemic and improve business performance, as well as to supplement capital and cash flow for the company. However, due to gradual recovery of the international transportation market, the aviation market both domestically and internationally faced many difficulties due to reduced demand, excess capacity, high competition, as well as negative factors such as high fuel prices, conflicts in Russia-Ukraine, Israel-Palestine in Gaza Strip, and increased financial risks (exchange rates, interest rates), so business operations continued to incur losses in Q4 and the whole year 2023. According to forecasts, the international market will recover gradually, and the corporation’s business operations will also have more positive results in 2024-2025.

Explaining the measures and roadmap to overcome the controlled status of HVN, the official representative of Vietnam Airlines said that the Restructuring Plan for the period 2022-2025 has been completed and reported to the shareholders and approved by the competent authorities.

In the plan, in 2024, the corporation will implement a set of solutions to overcome the consolidated loss position and negative owner’s equity position, such as implementing a set of solutions to enhance adaptation, quickly recover and improve business performance; restructuring assets and financial investment portfolios to increase income and cash flow.

“The corporation is confident that its business operations have gradually stabilized and is preparing the conditions for recovery and development in the coming period,”- the representative of Vietnam Airlines affirmed.

Vietnam Airlines’ shares are under control

Since Q1/2022, Vietnam Airlines’ shares have been classified under control due to cumulative losses and negative owner’s equity.

Since July 12, 2023, HVN shares of Vietnam Airlines have been moved from controlled status to restricted trading status due to late submission of audited financial statements for 2022.

On December 16, 2023, Vietnam Airlines held its annual general meeting of shareholders for 2023 and announced its audited financial statements for 2022. Accordingly, by the end of 2022, Vietnam Airlines’ total revenue reached VND 750,214 billion. Consolidated revenue was VND 71,775 billion, and the pre-tax losses of the parent company and the consolidated entity were -VND 8,841 billion and -VND 10,945 billion respectively. Estimated owner’s equity of the parent company and the consolidated entity at December 31, 2022 was -VND 3,579 billion and -VND 11,056 billion.

Ho Chi Minh City Stock Exchange (HoSE) has decided to remove HVN shares of Vietnam Airlines from the warning list starting from December 26, 2023. However, 2.2 billion HVN shares are still at risk of being delisted due to continuous business losses for 3 years, accumulated losses exceeding the contributed charter capital, and negative owner’s equity in the latest audited financial statements before the review date.

SOURCEcafef
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