Central bank confirms Vietnam Airlines interest-free loan

Vietnam’s central bank, the State Bank of Vietnam, has confirmed a government plan to provide an interest-free loan of up to VND4 trillion dong (USD173 million) to cash-strapped flag carrier Vietnam Airlines (VN, Hanoi). The loan will be issued via Vietnamese financial institutions by the end of 2021, the bank said in a statement. The central bank’s deputy governor, Đào Minh Tú, stressed to local reporters on March 10 that “a bank that properly implements the Vietnam Airlines loan scheme to support it in overcoming the difficulties caused by Covid-19 […] will then be refinanced by the State Bank.” He urged the country’s commercial banks to approach the airline to “discuss, exchange, and negotiate” the loan. The funds from the loan will be used to refinance other loans, and the central bank has pledged to continue to observe the group’s debts. The announcement follows Vietnam’s prime minister, Nguyễn Xuân Phúc, signing into law on January 9 a resolution for Vietnam Airlines to obtain the state-guaranteed loan. The measure is part of a VND12 trillion (USD518 million) rescue mission to return the carrier to profitability within two years, a plan the National Assembly of Vietnam approved in November 2020. As previously reported, the 86.19% government-owned airline also aims to sell VND8 trillion (USD345 million) worth of common shares to shareholders to supplement the company’s capital. Vietnam Airlines reported a net loss of VND11.1 trillion (USD479 million) in 2020, though this was less than the anticipated VND14.4 trillion (USD621 million). But it contrasts with net profit of VND2.54 trillion (USD110 million) for 2019.