Vietnam Airlines today [December 14] held an extraordinary general meeting that mapped out a restructuring plan for the national flag carrier in the 2021-2025 period.

Overview of the meeting.

The move, which received approval from all major shareholders, is expected to improve the airline’s efficiency in the long term by enhancing financial capability and resilience to expand operation once the pandemic is contained.

Among major solutions, the airline would initiate dialogues with partners to delay payables for aircraft leasing fees and the delivery schedule of new ones.

In addition, Vietnam Airlines continues to liquidate, sell or lease old aircraft, at the same time restructuring investment portfolio and subsidiaries via privatization or capital transfer to refocus on core businesses.

The airline also aims to raise registered capital by issuing more shares and corporate bonds to investors.

Overall, the restructuring process would help Vietnam Airlines streamline its organization and enhance corporate governance capability, focusing on IT applications and digital transformation.

During the pandemic, Vietnam Airlines put up with measures to cut operational expenses and saved over VND5.1 trillion ($222 million) in 2020, including labor cost of VND1.77 trillion ($77 million), and an estimated VND6 trillion ($261.2 million) this year.

In the third quarter, Vietnam Airlines completed issuing nearly 800 million shares for existing shareholders to raise VND7.96 trillion ($350 million) and subsequently increased the airline’s registered capital to VND22.14 trillion ($1 billion).

Vietnam Airlines also signed a credit contract of VND4 trillion ($173 million) from three local banks, as the State Bank of Vietnam (SBV) provided these lenders with a refinancing loan of the exact amount at a 0% interest rate.

The Government is currently Vietnam Airlines’ largest shareholder, holding 86.19% stake via the Commission for State Capital Management (CSCM), followed by government-investment arm State Capital Investment Corporation (SCIC) (31.14%), and Japanese aviation company ANA Holdings (5.62%).

SCIC became a major shareholder of the national flag carrier after forking out VND6.89 trillion ($300 million) to acquire a 31.08% stake, which is part of a resolution passed by the National Assembly (NA) last year that allows the Government to bail out the airline with a rescue package worth VND12 trillion ($522 million).