The State Bank of Vietnam (SBV), the country’s central bank, is drafting a new circular with the aim of providing refinancing loans for lenders of the national flag carrier Vietnam Airlines.

The SBV would provide refinancing loans worth a maximum of VND4 trillion (US$172.85 million) for credit institutions being the carrier’s lenders. Photo: Le Thanh

The move is in line with a resolution from the National Assembly last year that authorizes the SBV to help Vietnam Airlines ease the Covid-19 fallout.

Under the draft circular, the SBV would provide refinancing loans worth a maximum of VND4 trillion (US$172.85 million) for credit institutions being the carrier’s lenders.

At the same time, Vietnam Airlines, in which the state currently holds an 86.19% stake via the Commission for State Capital Management (CSCM), gets the permission to sell additional shares of VND8 trillion (US$345.68 million) to existing shareholders to raise its registered capital. As such, the government would assign its investment arm State Capital Investment Corporation (SCIC) to buy Vietnam Airlines shares.

Interest rates for refinancing loans is set at 0% per year, which is also applicable for any extension for such loans, if any.

The refinancing period would be upon the request from credit institutions in subject, but would not exceed 364 days, while the extension period is expected to be within 1,092 days.

In the Covid-19 ravaged year of 2020, Vietnam Airlines posted a pre-tax profit of nearly VND11.1 trillion (US$482 million). The figure was significantly encouraging as the airline  estimated loss of VND14.4 trillion (US$626.3 million).

As the aviation industry was among the hardest-hit sectors by the pandemic, Vietnam Airlines operated around 96,500 flights in 2020, down 48% year-on-year. This resulted in decline of 51% year-on-year in the number of passengers to 14.23 million and a fall of 47% in the amount of cargo for transportation  to 195,000 tons.

For the next five years, Vietnam Airlines targets to reestablish its operation, while continuing to push for restructuring process by streamlining its organization structure and enhancing efficiency in performance, especially in the sale and leaseback (SLB) of aircraft.