Vietnam Airlines to invest $433mn in Long Thanh airport

Cash-strapped Vietnam Airlines (VN, Hanoi) proposes to inject nearly VND10 trillion dong (USD433 million) in infrastructure development at Long Thanh International Airport, currently under construction in Dong Nai province, south-eastern Vietnam. It will be located 40 kilometres northeast of Ho Chi Minh City. This is according to a proposal by the airline, submitted to the country’s Ministries of Transport, and Planning and Investment, and the Commission for the Management of State Capital at Enterprises (CMSC), local media reports. Vietnam Airlines would raise some 70% of the VND9.9 trillion (USD429 million) through loans, and 30% from equity. The national carrier will spend the money on the supply of aviation fuel, ground operations, catering, a cargo terminal, an aviation logistics centre, airline lounges, and duty-free retail. The airline has also requested the construction of a separate terminal for Vietnam Airlines and its subsidiaries, and policy approvals that would accommodate the group’s future capacity growth. The company would also like to establish an MRO facility at the airport. Vietnam Airlines proposes to invest jointly with its subsidiaries or as a joint venture with the Airports Corporation of Vietnam (ACV). Vietnam Airlines President Dang Ngoc Hoa said the proposal was in line with the airline’s growth strategy for 2021 to 2030, which calls for maximum resource allocation and participation in infrastructure projects at Long Thanh International Airport. Construction of Long Thanh International Airport began on January 5, 2021. It will be built in three phases until 2040 and encompass four runways and four terminals with the capacity to process 100 million passengers and five million tons of cargo per year. The first construction phase is divided into four projects, the third of which is financed to the tune of VND99 trillion (USD4.3 billion) by ACV, and includes site levelling, road connections, the construction of runways, passenger terminals, and auxiliary aviation infrastructure. Vietnam Airlines posted an after-tax loss of VND11.097 trillion (USD478 million) for the year in 2020. At the end of December 2020, its assets totalled nearly VND63 trillion (USD2.7 billion), with total liabilities of VND56.8 trillion (USD2.4 billion) and VND6.14 trillion (USD266 million) in equity. Reuters last year reported that Vietnam Airlines was in need of VND12 trillion (USD520 million). The government has approved a rescue plan for the airline, instructing the State Bank of Vietnam, the country’s central bank, to indirectly provide low-interest loans to Vietnam Airlines through financial institutions. To raise capital, the government will also buy new shares from the airline through its State Capital Investment Corporation (SCIC), which could invest up to VND6.8 trillion (USD295 million) to buy new shares from the airline as part of the support plan.