However, according to information provided to VTC News on the morning of May 4th, a leading airline executive stated that the main reasons were “increased international operations, restructuring efforts, and seasonal high-demand factors”.
Huge Profits Across the Board
In its recently released consolidated financial report for the first quarter of 2024, Vietnam Airlines (VNA) recorded consolidated net revenue of 27,964 billion VND, an increase of approximately 19% compared to the same period last year.
Consolidated revenue reached over 31,700 billion VND, representing a 32.8% increase year-over-year.
In contrast, the cost of goods sold increased by only 11%, leading to a robust improvement in VNA’s gross profit, which doubled year-over-year, reaching 4,084 billion VND.
Furthermore, VNA’s profit was boosted by “other income” amounting to 3,634 billion VND. The bulk of this other income came from the “debt write-off” of 3,030 billion VND and the disposal and sale of fixed assets worth over 568 billion VND, with the remainder consisting of fines and revenues from aircraft sale and leaseback transactions.
After deducting expenses and taxes, VNA’s consolidated net profit reached 4,441 billion VND.
With record revenue in the first quarter of this year, VNA reported a profit for the first time after 16 consecutive quarters of losses. Notably, this was also the highest quarterly revenue ever (31,700 billion VND in Q1 2024 compared to 25,500 billion VND in Q1 2019).
Increased international operations are believed to be a key factor contributing to the aviation industry’s strong profits. (Illustrative image: VNA)
Similarly, Vietjet Air also recorded a post-tax profit of nearly 540 billion VND in Q1 2024, three times higher than Q1 2023 – the highest profit level since 2020.
In Q1 2024, VJC’s consolidated revenue reached 17,791 billion VND, up 38% year-over-year.
VJC’s gross profit also improved from 1,062 billion VND in the same period last year to 1,745 billion VND in the first quarter of this year. This resulted in a profit margin of 9.8%, higher than the 8.2% margin in Q1 2023. Consequently, VJC’s post-tax profit reached 540 billion VND, triple the amount in the same period last year.
Earlier, Vietravel Airlines reported a profit of over 10 billion VND in the first quarter of 2024. Vietravel Airlines’ revenue exceeded 491 billion VND, up nearly 42% compared to the same period in 2023.
The strong growth in revenue for domestic airlines during the early months of the year occurred amidst a context of escalating domestic airfares. Therefore, many analysts believe that the primary factor driving the airlines’ substantial profits is the increase in airfares.
What is the Aviation Industry’s Explanation?
In explaining its strong earnings, VNA attributed them to a surge in international air transport revenue, which exceeded 13,800 billion VND, representing a 30.4% increase compared to the same period last year.
The contribution of international operations to Vietnam Airlines’ air transport revenue reached 65%, three times higher than the low point in 2021. The proportion of international flights and revenue are also approaching pre-pandemic levels, currently very close to the levels of Q1 2019.
VNA’s international transport business performance.
In addition, the seasonal high-demand factor, following annual market trends, acted as a catalyst for VNA’s growth in business performance during the first three months of 2024.
Profitable subsidiaries also contributed positively to the parent company’s overall business performance.
Among them, Pacific Airlines’ successful negotiation of the return of all leased aircraft to their owners and the settlement of liabilities enabled the parent company to record a significant increase in “Other Income”, notably contributing to the consolidated profit in the first quarter.
Another key factor, according to VNA, is the airline’s sustained efforts in enhancing service quality and digital transformation, leading to increased revenue from high-yield passenger segments.
” VNA has proactively implemented various measures to improve the efficiency of fleet and personnel utilization, increase supply capacity, wet-lease aircraft to meet passenger demand, minimize expenses, negotiate service prices and interest rates, and more. “, VNA’s report states.
General Industry Trends
Recovery and resurgence are widely considered the common themes for the global aviation market following COVID-19.
According to statistics from the International Air Transport Association (IATA), the international passenger transport market accounted for 60.1% of total global passenger kilometers (RPKs) in 2023, significantly higher than the low of 37.6% in 2021 and approaching 63.8% in 2019.
Recovery and resurgence are widely considered the common themes for the global aviation market following COVID-19. (Illustrative image)
IATA also forecasts that global airline revenue could grow by 7.6% to a record $964 billion in 2024. Operating profit for 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 is likely to reach 61 million tons this year, an increase of 3 million tons compared to 2023.
Meanwhile, according to data from the Civil Aviation Authority of Vietnam, domestic airlines operated 66,605 flights in Q1 2024.
Yesterday (May 3rd), the Ministry of Transport (MOT) instructed the Department of Transport and the Civil Aviation Authority to review and inspect the increase in airfares, especially during the holiday period from April 30th to May 1st.
Specifically, the MOT instructed the Civil Aviation Authority to immediately review and inspect the sale of tickets, implementation of declarations, pricing, public disclosure, and transparency of ticket prices by airlines.
” If any irregularities are detected, they should be promptly addressed, rectified, and immediately processed in accordance with their authority (if necessary). Additionally, inspections
