Vietnam Airlines reports strong Q1 2024 financial results, driven by international revenue and a one-off income surge
International Revenue and a $3.6 Billion Exceptional Gain Contribute to Success
Vietnam Airlines (Vietnam Airlines, HoSE: HVN) announced a consolidated total revenue of over VND 31,700 billion in the first quarter of 2024, representing a 32.8% increase year-over-year. The company’s net profit reached VND 4,441 billion, a remarkable turnaround from the VND 37 billion loss recorded in the same period last year.
International air transport revenue amounted to over VND 13,800 billion in Q1 2024, a 30.4% increase compared to Q1 2023. The contribution of international flights to Vietnam Airlines’ total air transport revenue reached 65%, triple the share recorded at the low point in 2021.
After being impacted by the pandemic, Vietnam Airlines’ international flight network is recovering strongly. The proportion of international flights and revenue is now approaching pre-pandemic levels, nearing the figures reported in Q1 2019.
Notably, according to the recently released Q1 2024 financial report, the parent company’s sales and service revenue reached over VND 22,000 billion, and net income was nearly VND 1,500 billion, both showing significant improvements compared to the same period last year.
“The proportion of international flights and revenue is now approaching pre-pandemic levels, nearing the figures reported in Q1 2019. The strong recovery in international flight operations and seasonal factors, in line with annual market trends, were the key drivers behind Vietnam Airlines’ business growth in the first three months of 2024,” said a Vietnam Airlines representative.
In addition, profitable subsidiaries also made positive contributions to the corporation’s overall business results.
“In particular, Pacific Airlines’ successful negotiation to return all leased aircraft and settle outstanding debts allowed the corporation to record a significant increase in other income, contributing substantially to the consolidated profit in Q1 2024,” said a Vietnam Airlines representative.
Vietnam Airlines recognized an exceptional other income of VND 3,630 billion in Q1 2024, over 100 times higher than the VND 36 billion reported in the same period last year; of which, income from debt forgiveness amounted to over VND 3,030 billion.
Another key factor contributing to Vietnam Airlines’ increased revenue in Q1 2024 was the airline’s focus on service quality enhancement and digital transformation, which led to increased attraction of high-income passengers.
Specifically, the airline continued its strategy of service upgrades with enhancements from ground services to in-flight experiences, such as improving business-class lounge services, implementing a new boarding method, introducing a new in-flight menu, and providing wireless entertainment systems (Airfi) on the entire Airbus A321 narrow-body fleet, as well as diversifying entertainment programs.
Vietnam Airlines’ total number of passengers in Q1 2024 reached over 5.74 million, a 12.7% increase year-over-year. The airline’s flight occupancy rate was 86% for domestic flights and 80% for international flights, both higher than the same period in 2023.
In addition to improved financial results, Vietnam Airlines continued its commitment to social responsibility, contributing to social welfare. As a national flag carrier, Vietnam Airlines actively engaged in tourism and trade promotion initiatives, such as partnering with various localities (Dien Bien, Hue, Da Nang), renewing socioeconomic development cooperation agreements with cities across the country, introducing attractive promotions to stimulate tourism, and launching the “One S – A Different Vietnam” digital diary to encourage domestic tourism.
Global Industry Trends Align with Restructuring Efforts
Recovery and growth are global aviation industry trends following Covid. According to the International Air Transport Association (IATA), international passenger traffic in 2023 accounted for 60.1% of global passenger traffic, significantly higher than the 37.6% low recorded in 2021 and close to the 63.8% figure reported in 2019.
IATA also forecasts that global airline revenue could grow by 7.6% to a record $964 billion in 2024. Operating profit this year is expected to reach $49.3 billion. Net profit is also projected to increase by 10% to $25.7 billion.
IATA further predicts that approximately 4.7 billion people will travel by air in 2024, surpassing the previous peak of 4.5 billion in 2019. Air cargo volume this year is expected to reach 61 million tons, an increase of 3 million tons compared to 2023.
In the first two months of 2024 alone, the Asia-Pacific region’s international air travel market grew by 49.4% in terms of passenger traffic and 50.2% in terms of seat capacity, outpacing all other regions. The passenger load factor (PLF) reached 83.8%, the second highest globally.
Aside from the global aviation industry trends, Vietnam Airlines’ internal efforts played a crucial role in its positive business performance during the recent peak season.
The corporation proactively implemented decisive measures to enhance fleet and workforce utilization, increase supply capacity, wet-lease aircraft to meet passenger demand, minimize costs, negotiate service prices and interest rates, and more.
According to the Civil Aviation Authority of Vietnam, domestic airlines operated 66,605 flights in Q1 2024.
Vietnam Airlines alone operated 28,287 flights, a 10% increase compared to the same period in 2023, and led the industry with a 42.5% market share of the number of flights. When combined with its subsidiaries, Pacific Airlines and VASCO, the Vietnam Airlines Group’s market share reached 48.5%.
Vietnam Airlines announced the completion of the 2021-2025 Comprehensive Restructuring Plan and submitted it to shareholders and relevant authorities for review and approval.
According to the plan, in 2024-2025, the corporation will implement comprehensive measures to enhance adaptability and achieve profitable operations; restructure assets and the financial investment portfolio to increase income, cash flow, and prepare for the issuance of shares to increase equity capital after approval by relevant authorities.
In the stock market, investors have taken note of positive signals regarding the business performance of the aviation industry leader. At the close of trading on May 2, HVN shares were priced at VND 17,300/share, near their highest point since August 2022 and a 41% increase from the beginning of the year. The current market capitalization of Vietnam Airlines is VND 38,200 billion, equivalent to $1.5 billion.
During the peak holiday period of April 30 – May 1, Vietnam Airlines operated approximately 2,900 flights with 575,000 seats to meet passenger travel demand. Additionally, the airline offered over 2,000 additional flights departing after 9:00 p.m. daily on routes between Hanoi, Ho Chi Minh City, Da Nang, Nha Trang, and Quy Nhon to provide passengers with more options amid reduced supply due to engine recalls.
Vietnam Airlines recorded high passenger loads during the holiday period, with a system-wide seat occupancy rate of nearly 80%. On the domestic routes, the seat occupancy rate reached almost 90% on the peak day.
