A decision by aircraft lessors to write off debts owed by Pacific Airlines (BL, Ho Chi Minh City) has been instrumental in allowing parent Vietnam Airlines (VN, Hanoi Noi Bai International) to recently report its first profit in 16 quarters.
In March, ch-aviation reported that Pacific Airlines had suspended flights and returned all eight A320-200s to their owners in exchange for the lessors wiping accumulated debts of approximately USD220 million. Pacific is a wholly-owned subsidiary of the majority state-owned Vietnam Airlines.
Earlier this month, Vietnam Airlines reported a net profit of VND4.334 trillion dong (USD171 million) for the first quarter of the year on revenues of VND28.27 trillion (USD1.11 billion). It was the airline's highest-ever quarterly profit and first since 2019. However, the company attributed much of its financial turnaround to profitable subsidiaries, including Pacific Airlines, which suddenly shot into the black after the debt write downs in the quarter. Pacific Airlines lost VND1.499 trillion (USD58.9 million) in calendar 2023.
Shortly after suspending operations, the Civil Aviation Authority of Viet Nam (CAAV) instructed Pacific Airlines to submit a restructuring plan and resume flights as soon as possible or risk losing its air operator's certificate. The immediate plan was to lease aircraft from Vietnam Airlines and rely on that carrier's airport infrastructure and support services to resume operations. To date, this has not happened. The VNExpress outlet reported that Pacific Airlines' sole current business activity is providing ground-handling services for Bamboo Airways (QH, Hanoi Noi Bai International) at some airports.
Separately, majority state-owned Vietnam Airport Corporation, which manages and operates 21 civil airports in the country, has reported a sharp uptick in its bad debt provisions for the first quarter of 2024, primarily due to debts owed by airlines, including Pacific Airlines.
The airport operator's bad debts provision increased by approximately VND1.8 trillion (USD70.8 million) in the quarter to more than VND7.5 trillion (USD294.9 million), largely due to the VND2.184 trillion (USD85.9 million) owed by Bamboo Airways; VND900 billion (USD35.4 million) owed by Pacific Airways; and VND300 billion (USD11.8 million) owed by Vietravel Airlines (VU, Hue Phu Bai International). Vietnam Airport Corporation has provisioned 100% of these debts but still managed to scratch out a quarterly net profit of VND2.921 trillion (USD114.9 million).
