Vietnam’s national carrier Vietnam Airlines has reportedly seen a remarkable turnaround in its fortunes in the past 12 months and is looking positively to the future, says one of the airline’s main institutional investors. From being on the verge of bankruptcy just a few months ago, shares in the carrier are now outperforming every other airline in the world, according to market analysts.
The soaring share price is driven largely by a surprise return profit since the start of 2024, said the investor, PYN Fund Management, in a public statement issued on July 4, 2024. The airline’s finances have seen a welcome boost as travel to Vietnam has picked up rapidly since the pandemic, along with a cost-cutting program at the carrier that has begun to take effect on the company’s bottom line.
In 2023, Vietnam Airlines recorded total consolidated revenues of VND 93,265 billion ($3.7 million) – nearly 30% higher than the previous year and approaching pre-pandemic levels.
According to Bloomberg, shares in the predominantly state-owned carrier have surged so far in 2024 by a staggering 179%, albeit starting from a very low base. Profitability has been a stranger to the airline in the past four years, so its 1Q24 return to the black surprised many investors. However, this change of fortunes is one the airline is hoping to capitalize upon going forward.
The carrier is making tweaks to its frequencies on its best-performing routes and increasing capacity where possible to capitalize on the rise in overall demand for its services.
One only has to go back to the end of 2023 and the start of 2024 to see an airline at serious risk of insolvency and facing the ignominy of being delisted from the Ho Chi Minh Stock Exchange. However, with its share price now riding sky-high, stock in the company is now outperforming that of its far greater local rivals, according to Bloomberg.
In the PYN Fund Management statement, Vietnam Airlines expects to record an “all-time high revenue and turnaround in profit” for FY2024. Vietnam Airlines currently operates a fleet of 97 aircraft according to ch-aviation. This is comprised of 41 A321s, 20 A321neos, 14 A350-900s, 11 787-9s, four 787-10s, and six ATR72s. Additionally, the carrier took delivery of its first A320neo on July 8, 2024.
On the back of its newfound position as a profit-making airline, the airline’s board is wasting no time planning for future growth to capitalize on surging demand for air travel both within Vietnam and elsewhere in the region. The airline is said to hold ambitions to expand throughout the remainder of 2024 by adding to its existing route network across Southeast Asia and adding services to key points within Europe.
For example, the airline will focus on developing routes to South Korea and China, from where much of Vietnam’s inbound tourist traffic originates. On July 2, 2024, the carrier celebrated the 30th anniversary of its nonstop services between Vietnam and South Korea and welcomed the 15 millionth passenger on its route between Ho Ci Minh City and the South Korean capital of Seoul.
However, the airline’s board is described as wary of its positive position and cautious about getting carried away amid ongoing challenges facing its business.
“In 2024, challenges continue to face the aviation sector such as macro-economic uncertainties,” the carrier’s Chairman Dang Ngoc Hoa said in a statement issued on June 24, 2024. “The company will focus on restructuring assets, capital, investment portfolio, organizational structure and corporate governance reforms. The primary goal is to reduce losses and balance revenue and expenditure in 2024.”