Rough Q4/2023 landing for Vietnam aviation industry

Most businesses operating in the Vietnamese aviation industry and support services have reported a year-on-year fall in net profits in the fourth quarter of 2023.

According to the Civil Aviation Authority of Vietnam, domestic operations served 42 million passengers in Q4/2023, down 3% year-on-year, but up 12% over the same period in pre-pandemic 2019.

International operations, meanwhile, served 32 million passengers, 1.7 times higher than Q4/2022, but just 77% of Q4/2019.

Overall, air passenger transport grew 34.5% year-on-year in 2023, equal to 93.6% of 2019.

Although the aviation market showed signs of recovery, 2023 was a difficult year for the industry because the business environment was not favourable, with high jet fuel prices and unexpected exchange rate fluctuations.

National flag carrier Vietnam Airlines, listed on the Ho Chi Minh Stock Exchange (HoSE) as HVN, recorded net revenue of VND23,831 billion ($977.84 million) in Q4/2023, a year-on-year increase of 23%. Of this, domestic and international revenues rose 14% and 49.1% year-on-year, respectively.

The company's gross loss of VND189 billion ($7.76 million) marked an improvement from a loss of VND1,077 billion in Q4/2022. After deducting expenses and taxes, HVN reported a net loss of VND1,980 billion ($81.25 million), down nearly 39% from VND3,239 billion in Q4/2022.

In 2023 as a whole, HVN’s net revenue reached VND91,458 billion ($3.75 billion), an increase of nearly 30% year-on-year and meeting 99.6% of the annual target.

It, however, suffered a net loss of VND5,517 billion ($226.4 million), keeping it below a planned loss of VND6,000 billion.

Budget carrier VietJet Air (HoSE: VJC), reported Q4/2023 net revenue of VND62,000 billion ($2.54 billion), up 56% year-on-year.

While it suffered a gross loss of VND102.3 billion ($4.2 million) in the period, thanks to other profits of nearly VND444 billion, the airline had an overall net profit of VND151.8 billion ($6.23 million), compared to a loss of over VND2,449 billion in Q4/2022.

For the whole of 2023, VJC’s net revenue reached VND62,500 billion ($2.56 billion), up 56% year-on-year. Its net profit of VND344 billion ($11.12 million) compared to a loss of VND2,262 billion in the previous year.

With these results, Vietjet exceeded the year revenue target by 24% (VND50,178 billion or $2.06 billion), but its profit was equal to just 6% of the VND1,000 billion ($41 million) target.

Supporting businesses and services

The fourth quarter of 2023 was also rough for supporting businesses and general aviation services.

Danang Airport Services Joint Stock Company (HoSE: MAS) reported a net profit of VND290 million ($1,190) in Q4/2023, down nearly 82% year-on-year.

Southern Airport Services Joint Stock Company, registered on the Unlisted Public Companies Market (UPCoM) as SAS, earned Q4/2023 net revenue and gross profit of VND694 billion ($28.5 million) and VND383 billion ($15.7 million), up 24% and 26% year-on-year, respectively.

Its gross profit margin inched up slightly to 55%, but management costs expanded 50% to VND144 billion ($5.9 million) due to bad debt provisions. As a result, the company’s net profit in the quarter plunged 41% year-on-year to VND52.8 billion ($2.17 million).

Similarly, Noi Bai Cargo Terminal Services Joint Stock Company (HoSE: NCT), Saigon Cargo Services Corporation (HoSE: SCS) and Saigon Ground Services Joint Stock Company (HoSE: SGN) reported respective net profit declines of 18.96%, 18.37% and 6.67% in Q4/2023.