The Vietnamese government’s investment arm State Capital Investment Corporation (SCIC) has so far acquired a 31.08% stake in the national flag carrier Vietnam Airlines in a deal worth VND6.89 trillion (US$300 million).

Vietnam Airlines has been struggling to cope with Covid-19 impacts. Photo: Le Thanh

The move came following a resolution passed by the National Assembly (NA) last year that allows the Government to bail out Vietnam Airlines that was severely hit by the Covid-19 pandemic via a rescue package worth VND12 trillion ($522 million).

Under the plan, the airline, in which the State currently holds an 86.19% stake via the Commission for State Capital Management (CSCM), could sell additional shares worth VND8 trillion (US$345.68 million) to the SCIC to raise its registered capital.

The proceeds raised from this transaction would help Vietnam Airlines to maintain liquidity in the immediate future and mitigate impacts from the pandemic.

Another support for Vietnam Airlines came in form of a refinancing loan worth VND4 trillion ($173 million) at a 0% interest rate for the airline’s lenders.

In July, Vietnam Airlines signed a credit contract of such amount with three local commercial banks, including Southeast Asia Commercial Bank (SeABank), Vietnam Maritime Commercial Bank (MSB), and Saigon-Hanoi Commercial Bank (SHB).

The Ministry of Planning and Investment (MPI) previously estimated an overdue debt of VND6.24 trillion (US$272 million) could lead to the bankruptcy of Vietnam Airlines.

Given the severe Covid-19 situation in Vietnam, the airline estimated losses of VND10 trillion (US$436 million) in the first half of 2021.