Vietnam Airlines has asked Vietnam’s National Assembly to extend the maturity date on a zero-percent loan made to the airline to support its recovery after COVID. It has been reported that if the extension is not approved the airline risks entering insolvency.
Vietnam Airlines has not had a great few years, and some of that can be attributed to COVID-19 and greater economic challenges facing the global economy. However, some consideration needs to be given to the way the airline is being run.
Just this week, the airline put what was its budget subsidiary, Pacific Airlines, back in the air but with meals and luggage included in ticket prices and in-flight entertainment, essentially doing away with its budget image. This now, more or less, appears to put the airline in direct competition with its parent company.
With this in mind, whereas there may be an argument to be made for supporting the national carrier in events outside of its control, in the current circumstances there should be some pause for thought. That said, the airline is a huge operation with lots of moving parts, lots of ancillary businesses that rely on its continued operation, and lots of employees that rely on the airline for their paycheck–it’s unlikely the National Assembly will deny the airlines’ request.