Vietnamese aviation bounces back12/05/2023
Thanks to the Tet holiday peak and increased international flights, Vietnam Airlines, Vietjet have reported returning profits, while Bamboo Airways is also approaching break-even point.
The industry leader Vietnam Airlines has just broken a losing streak of 12 consecutive quarters since the appearance of Covid-19. According to newly published financial reports, Vietnam Airlines’ Q1 revenue reached VND23.64 trillion, double that of the same period last year. This is also the highest level since the beginning of 2020 and close to pre-pandemic levels in 2019.
After deducting expenses, the airline recorded consolidated pre-tax profit of VND19.3 billion in Q1, while in the same period last year it suffered losses of over VND2.6 trillion. A representative from Vietnam Airlines said that the results were mainly due to efficient operation during the Tet holiday season, recovery in international markets, especially as China gradually relaxes its disease control policies. In markets such as the US, Europe and Australia, seat utilization rates are high. Vietnam Airlines has had to increase capacity during peak periods to serve passengers.
Similarly, the consolidated revenue for the first three months of this year for Vietjet Air was also approximately VND12.9 trillion – the highest level in the past 12 quarters. Of which, revenue from international markets improved, accounting for 45% of total passenger transport revenue. From the second half of last year to now, Vietjet has also been the pioneer domestic airline in opening new routes to India, Kazakhstan and Australia.
Thanks to strong business operations in Q1, the airline’s profits have returned with pre-tax profits of nearly VND243 billion – almost equal to the same period in 2022.
For the entire Q1, Vietjet operated 31,300 flights, transporting nearly 5.4 million passengers, up 57% and 75% respectively compared to Q1/2022. Meanwhile, the number of passengers carried by Vietnam Airlines’ parent company also increased by 63% to 5.1 million.
In addition to high travel demand and revenue recovery, the improved efficiency of business operations of airlines is partly due to a drop in fuel prices. In the last quarter of 2022, both Vietnam Airlines and Vietjet operated under cost when Jet A1 fuel prices were high along with high interest rates. Last year, the fuel price had a period of exceeding $160 per barrel and averaged around $130 per barrel.
However, according to Vietnam Airlines, the average Jet A1 fuel price for the first three months of this year was $110.69 per barrel, which is $8.05 lower than the company’s plan at the beginning of the year. The average USD/VND exchange rate in Q1 was also lower than Vietnam Airlines’ estimate, resulting in the airline recording a foreign exchange gain of over VND343 billion in the period. Similarly, Vietjet also recorded a forex gain of about VND146 billion, triple that of the same period in 2022.
Bamboo Airways has not yet announced detailed results for Q1. However, at an extraordinary shareholders meeting in early April, Bamboo Airways Chairman Nguyen Ngoc Trong said that the airline was approaching break-even point in Q1/2023 as all 30 aircraft are operating at full capacity. Trong added that the airline “will take off in 2024 and make a profit from 2025.”
Instead of defensive measures or downsizing to reduce costs, airlines are also rushing to add more aircraft to serve the expanding network demand. Bamboo Airways plans to receive an additional 6-8 new aircraft. The airline is also working with partners in China to open new routes to the country from now until the end of Q3. At the same time, the airline is increasing frequency on many routes to Southeast Asia and Northeast Asia in the second half of the year.
Vietravel Airlines also plans to receive three more aircraft to expand its international market. From now until the end of the year, Vietjet Air will receive a new batch of both narrow-body and wide-body aircraft, increasing the total fleet to 87. This year, the airline will continue to develop new routes to India, Japan, and South Korea.