Vietjet Aviation Joint Stock Company (HOSE: VJC) today reports its business result of 2020’s second quarter, the period that saw the most impact by Covid-19 pandemic.
Accordingly, the carrier operated a flight network of 52 domestic routes with 14,000 flights and transported more than two million passengers during the quarter.
By the end of Q2/2020, amid the Covid-19 pandemic, Vietjet records air transport revenue at 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).
For the whole first six months of the year, the airline’s loss in air transportation business stands at VND2,111 billion (approx. US$90.5 million), which is considered a modest number compared to the total loss of over US$84 billion for the global aviation industry.
To support for its cash flow, Vietjet has proactively sought for partners and implemented many financial solutions such as asset transfer and financial investment, which resulted in a 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 and a consolidated profit of VND73 billion (approx. US$3.2 million) in H1/2020, increasing financial resource for the airline’s air transport business. These results were achieved thanks to the solid financial base, which the company has accumulated for the past years.
As Vietnam opened its sky for domestic operation in June, Vietjet resumed all of its domestic flight network with 300 daily flights, a triple to five times growth compared to those at the country’s Covid-19 pandemic peak.
The airline also launched eight new routes to meet rising domestic travel demand, increasing its total domestic flight network to 52 routes with overall flight operated reached 14,000 flights. Its total passenger carriage reached 1.2 million passengers, marking a positive recovery for the domestic market in June.
With the cost optimization advantages following the models of LCCs worldwide, Vietjet has been proactively implementing cost-saving measures with an average cost drop of 55% due to operation capacity reduction of 30% – 35% and service cost decrease around 20%-25%.
Especially in May, Vietjet successfully stocked up on fuel when the fuel price was low, leading to a cost reduction of 25% compared to the market price. In addition, the carrier was also in talk with suppliers for a reduction of 20% up to 45% of charge for airport handling, technical activities and other services.
Aiming to become a new-age carrier, Vietjet always steps up on carrying out commercial solutions based on 4.0 technology platform and mobile application development. Thanks to its tech-based cost optimization capacity, the airline has seen an effectiveness when following LCC model, which has been proven to be the right choice for the past economic crises.
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 kept at a good rate at 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 in order 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 the cargo transportation business, developing SkyBoss product and ancillary services, offering “Power Pass”, the unlimited flight pass, etc. In addition, the carrier also started self-service ground operation at Noi Bai International Airport in Hanoi to be more active in operation, reduce costs, increase ancillary revenue, and especially improve passenger quality services.
In particular, Vietjet has also worked on many solutions to increase revenue and optimize operations. It has boosted cargo transport service since April, being 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 service, expanding its self-serve ground service at Noi Bai International Airport to optimize operating costs.
Apart from the effort of the airline itself, the support of Vietnam government is also anticipated to reduce the pressure and boost the 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 support, extension of payment term, etc.
These supports should be urgent and specific amid the tough situation to strengthen domestic carriers.
All over the world, airlines are strongly supported by local governments to recover from the devastating impacts of the pandemic as it is the crucial sector to stimulate economic development.
In conclusion, the airline’s results in air transportation business and financial activities are considered to be positive, making it the very few airlines in the world to cope well with the Covid-19 pandemic.
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