The 2024 Annual General Meeting of Shareholders of Saigon Ground Services Corporation was held on the morning of April 25. Photo: VH
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2024 Will Be More Challenging Than 2023
Assessing the outlook for 2024, Mr. Dang Tuan Tu, Chairman of the Board of Directors of SGN, said that the aviation industry will face many difficulties, even more challenging than 2023.
The Chairman of SGN explained that the international recovery process is still slow, due to many factors such as wars, conflicts, political tensions, inflation, and the slowdown of the global economy. “This leads to a decrease in people’s income in various countries and makes global travel demand not as strong as before. Therefore, recovery growth will be slow,” Mr. Tu shared.
According to Mr. Tu, two of Vietnam’s major tourism markets, China and Russia, have both been affected.
China’s economy is recovering slowly, and the government tends to stimulate domestic tourism rather than international tourism. In Russia, the ongoing war and sanctions are making it difficult for the country’s tourism industry. “This year, new slots have been granted for direct flights to the Russian market, but it is still very difficult,” he said.
Regarding domestic aviation, Mr. Tu assessed that after 2 years of the pandemic, airlines have significantly reduced their resources.
According to him, the fleet of aircraft of the airlines has been significantly reduced, especially Bamboo Airways, from 30 aircraft to only 7-8 aircraft. As for the two major airlines, Vietnam Airlines and VJC, their fleet of aircraft was affected by the technical problems of the NEO 320-321 engine, which had to be suspended for maintenance. “The number of aircraft out of operation accounted for 20-30% of the aircraft of these two airlines,” said Mr. Tu.
This shows that the transportation capacity of the airlines has been reduced, while their financial situation has also weakened considerably. “The aviation industry is still affected and has not recovered; the airlines are unable to increase their operating capacity and are still slow in paying service providers such as SGN,” he said.
In 2023, the Company set up a 70% provision for receivables from Bamboo Airways (provision of VND 53.6 billion) and also a provision of VND 6.6 billion for receivables from Vietravel Airlines.
Long Thanh Airport Is the Future of SGN
With the above difficulties, SGN presented to shareholders a business plan for 2024 with modest growth. Accordingly, consolidated revenue is expected to reach VND 1,499 billion, similar to last year; after-tax profit is VND 240 billion, up nearly 6%.
This year, the Company will focus on improving service quality, focusing on customers, strengthening its brand, retaining customers, and developing new customers.
The second priority is to devote all resources to bidding at Long Thanh Airport – a project that is described as opening up many promising prospects for the aviation industry and is expected to commence phase 1 from 2026. ACV is the investor of this giant project.
Accordingly, SGN will participate in the bidding for the investment project to build, exploit, and handle ground service vehicles and aircraft sanitation areas No. 01 and 02 – Long Thanh International Airport.
Speaking about the importance of Long Thanh Airport, Mr. Tu, who is also one of the representatives for ACV’s capital contribution in SGN, emphasized: “Long Thanh Airport will determine the existence and future development of the company.”
According to the feasible study plan (FS), when phase 1 starts operating, 80% of international flights will be transferred to Long Thanh. “Thus, if we do not win the bid at Long Thanh Airport, we will suffer significant losses when international flights at Tan Son Nhat are transferred to Long Thanh. This shows that Long Thanh Airport will determine the company’s survival in the coming years,” affirmed Mr. Tu.
Not Just Ground Services
The leader of SGN also shared that when deploying services at Long Thanh Airport, the Company will take many steps to develop services in Long Thanh, not just ground handling for airlines.
“SGN will link services within the ACV ecosystem, such as operations in the terminal and cargo operations. In this way, we can develop strongly in Long Thanh. These are new orientations,” he said.
If it wins the bid in Long Thanh, SGN will spend nearly VND 174 billion, including VND 51 billion for Tan Son Nhat International Airport (apron equipment, information technology, and preparation for Long Thanh International Airport) and VND 123 billion for investment in equipment at Long Thanh International Airport.
