The refinancing loan package worth VND4 trillion (US$173 million) set to be disbursed for Vietnam Airlines in late June or early July, Director of Vietnam Airlines’ Communication Department Dang Anh Tuan told local media, adding that the national flag carrier has completed all necessary legal procedures regarding this process.

Vietnam Airlines is on the brink of bankruptcy. Photo: Kinhtedothi

Last year, the National Assembly ratified a resolution that allows the Government to work out a VND12-trillion (US$522 million) rescue package for Vietnam Airlines.

Under the plan, the Government has assigned the State Bank of Vietnam (SBV) to provide a refinancing loan worth VND4 trillion (US$173 million) at a 0% interest rate for Vietnam Airlines’ lenders.

The airline, in which the State currently holds an 86.19% stake via the Commission for State Capital Management (CSCM), also gets the permission to sell additional shares worth VND8 trillion (US$345.68 million) to existing shareholders to raise its registered capital.

Tuan said Vietnam Airlines is finalizing a plan for such share issuance, which is scheduled to complete in the fourth quarter of this year.

At the SBV’s press conference held on June 21, Director General of the SBV Department of Credit for Economic Sectors Nguyen Tuan Anh said three banks of Southeast Asia Commercial Bank (SeABank), Vietnam Maritime Commercial Bank (MSB), and Saigon-Hanoi Commercial Bank (SHB) have committed to providing a combined loan worth VND4 trillion (US$173 million) sourced from SBV’s refinancing fund. 

“All parties are actively negotiating for the soon conclusion of a credit contract so that the said amount could be disbursed in late June or early July,” Tuan added.

The move was seen as welcome news for Vietnam Airlines, following a recent report from the Ministry of Planning and Investment (MPI) that the airline is on the brink of bankruptcy with an overdue debt of VND6.24 trillion (US$272 million).

Vietnam Airlines estimated its losses in the first quarter to be at around VND4.8 trillion (US$209 million), a record figure in a quarter. The losses could even go up to VND10 trillion ($436 million) for the first six months of this year, stated the report.

As of March 31, Vietnam Airlines recorded negative undistributed after-tax profits of over VND14.2 trillion (US$618 million), higher than its registered capital of VND14.18 trillion (US$617 million).

The issue, it continues to persist, could lead to the delisting of Vietnam Airlines’ shares on the Ho Chi Minh City Stock Exchange (HoSE). On April 15, the HoSE has already issued a warning to the airline.