Vietnam Airlines is considering setting up a cargo airline amid its business operation is severely affected by the Covid-19 pandemic.

Overview of the meeting. Photo: Vietnam Airlines

General Director of Vietnam Airlines Le Hong Ha revealed the move at the annual shareholder meeting held today [July 14].

“We came up with this idea a few years ago but it was not materialized due to different market factors,” Ha said.

The Covid-19 pandemic, however, has changed the situation and caused a sharp drop in the number of air passengers.

According to Ha, the national flag carrier has converted seven passenger planes into freighters, including five Airbus A350 and two A321.

In June, revenue from cargo transportation, which normally accounts for 10% of the total, exceeded that of passengers, noted Ha, saying this is the basis for Vietnam Airlines to consider setting up a cargo airline after the pandemic.

A report from the Ministry of Transport revealed revenue from freight service of airlines in the past year tripled compared to the pre-Covid-19 period.

Since early 2021, the severe Covid-19 situation, especially during the peak season in the Tet (Lunar New Year) holiday and the national holiday from April 30-May 1, continues to put pressure on the airline.

It is estimated that Vietnam Airlines suffered a loss of VND9.82 trillion (US$426.7 million) in the first half of 2021. For this year, the airline forecast consolidated loss to rising up to VND14.5 trillion ($626.8 million), a surge of 30% against last year.

The prediction was based on the assumption that Vietnam Airlines could sell 11 Airbus A321, the government allows tourists to return to Phu Quoc island in the southern province of Kien Giang, the application of vaccine passport, and the airline completes disbursing the full VND12-trillion ($521 million) government’s support package.

Last week, Vietnam Airlines signed a credit contract worth VND4 trillion ($173 million) with three banks of SeABank, SHB, and MSB, with the source from the refinancing fund provided by the State Bank of Vietnam (SBV).

At the meeting, the airline also announced the plan to issue shares for existing stakeholders to raise VND8 trillion ($347.6 million), scheduled to take place in the third quarter.

Chairman of Vietnam Airlines’ Directors of Board Dang Ngoc Hoa said proceeds raised from the move would be used to pay overdue debts and cover the operational expense