Vietjet Aviation Joint Stock Company (HOSE: VJC) has reported its business results for the second quarter of 2020, a period that was most impacted by the Covid-19 pandemic. The airline operated a flight network of 52 domestic routes with 14,000 flights, transporting more than two million passengers during this period.
At the end of Q2/2020, Vietjet recorded an airport transport revenue of VND1,970 billion (approx. US$84.5 million), a decrease of 54% year-on-year, and a loss of VND1,122 billion (approx. US$48 million). The first half of the year saw the airline’s decline in air transportation at VND2,111 billion (approx. US$90.5 million).
Vietjet has sought partners and implemented financial solutions such as asset transfers and financial investments, which resulted in financial revenue of VND1,174 billion (approx. US$50.4 million) with a post-tax consolidated profit of VND1,063 billion (approx. US$45.6 million) in Q2/2020. A consolidated profit of VND73 billion (approx. US$3.2 million) was recorded in H1/2020. These results were achieved due to the strong financial base, which the company has accumulated over the years.
Vietjet resumed all of its domestic flights in June when Vietnam opened up for internal operations with 300 daily flights. The airline also launched eight new routes to meet rising domestic travel demand, increasing its total domestic flight network to 52 routes with a total of 14,000 flights operated. Its total passenger carriage reached 1.2 million passengers in June, marking a positive recovery for the domestic market.
With cost optimisation advantages following the models of LCCs worldwide, Vietjet has been proactively implementing cost-saving measures with an average cost drop of 55% due to an operation capacity reduction of 30%-35%, and a service cost decrease of around 20%-25%. In May, Vietjet stocked up on fuel reserves when prices were low, leading to a cost reduction of 25% compared to the market price. The carrier was also in talks with suppliers for a reduction of 20% up to 45% of the charge for airport handling, technical activities and other services.
The airline’s total asset is VND48,392 billion (approx. US$2.075 billion) with the owner’s equity being at VND17,339 billion (approx. US$745 million), including treasury shares. Its current liquidity is 1.4 while debt to equity ratio is 0.57, which are among the lowest rates in the global aviation industry. It allows Vietjet to proceed with its long-term financing plan to enhance its internal resources for fighting the current pandemic.
Being active on measures to weather Covid-19 pandemic, Vietjet has implemented many solutions since early 2020, including expanding its cargo transportation business, developing its SkyBoss product and ancillary services, offering “Power Pass”, an unlimited flight pass. The carrier also started self-serve ground operations at Noi Bai International Airport in Hanoi to be more active in activities, reduce costs, increase ancillary revenue, and improve passenger quality services. In particular, Vietjet has also worked on many solutions to increase revenue and optimise operations. It has boosted cargo transport service since April and is the first airline in Vietnam to gain the government’s approval to deploy cargo operations in the passenger cabin (CIPC). At the same time, the company has increased charter services, expanding its self-serve ground service at Noi Bai International Airport to optimise operating costs.
Aside from the effort of the airline itself, the support of Vietnam’s government has reduced the pressure and boosted aviation recovery. Following the Vietnamese airlines’ proposal, the Government and industry authorities are in consideration of aviation support packages, including exemption of taxes, fees, aviation services, environmental tax exemptions for flight fuels, financial assistance, extension of payment term, etc.
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