Vietnam’s National Assembly has approved a plan to issue VND 22 trillion or US$867.2 million worth of shares to existing shareholders to help to clear some of the airline’s outstanding debts. It has also agreed to defer tax owed by Pacific Airlines, a subsidiary of Vietnam Airlines, to the end of the year.
This is an interesting development in that 86 percent of the airline is owned by the government. With this in mind, the National Assembly has effectively given the government permission to issue several thousand billion dong worth of shares to itself. It’s not clear, however, if the National Assembly will give the government permission to buy said shares.
Further to the point, as a subsidiary of Vietnam Airlines, the tax debt of Pacific Airlines is essentially debt held by the government and owed to itself. It has, however, been made clear that Pacific Airlines will be required to pay the outstanding tax debt when the extension ends. It’s not clear, however, how the government might go about collecting on said tax debt given that, once again, it is the majority shareholder in the airline.
Of note, VN Express had Vietnam Airlines’ accumulated debt at the end of September at VND 35.2 trillion or US$1.39 billion.