Vietnam Airlines shares face delisting risk

Vietnam Airlines shares may be delisted if its 2022 audited consolidated financial statement continues to record negative parent company profits or equity, the Ho Chi Minh City Stock Exchange (HoSE) said.

At the beginning of June, the HoSE had decided to keep control of Vietnam Airlines shares (HVN) due to negative equity of VND2,160 billion ($91.74 million).

Besides, the parent company's profit after tax in audited financial statements in the past two years, 2020-2021, also reported a negative number.

According to the Securities Law, shares of a public company are delisted if it incurs a loss for three consecutive years, or the accumulated loss exceeds the actual contributed charter capital or equity is negative according to the audited financial statement of the year before the time of review.

Therefore, the airline's shares are subject to control in line with the HoSE's regulations on listing and trading of listed securities.

In Vietnam Airlines's mid-year reviewed financial statement, Deloitte Vietnam has warned the carrier would find it difficult to sustain its operations with its short-term debt exceeding short-term assets by VND36,425 billion ($1.55 billion) and negative equity hitting VND4,900 billion ($209 million).

The ability of Vietnam Airlines to continue operating will depend on financial support from the government, extension of payment deadline for bank loans as well as payables to suppliers and lessors, the auditing firm says.

In the first half of the year, the company earned revenues of more than VND30,000 billion ($1.28 billion), double the same period last year. However, due to high fuel prices and dormancy of many international routes, its losses mounted to over VND5,100 billion ($217.4 million), down more than VND3,000 billion compared to the same period last year. By June 30, the airline's accumulated loss hit VND28,900 billion ($1.23 billion).

To improve its operating capital situation, the carrier issued 796.1 million new shares in 2021 for proceeds of VND7,961 billion ($339.31 million). It also signed a loan contract and was disbursed VND4,000 billion, with the repayment period extendable to 2024.

Vietnam Airlines has also been negotiating with commercial banks for more credit lines to boost production and business activities. As of June 30, the total credit limit that Vietnam Airlines had signed with commercial banks was about VND18,549 billion ($790.6 million), of which unused short-term loans hit VND10,354 billion.

The national airline has also sought other sources of income including liquidation of aircraft, aircraft engines and financial investments. It has sold one aircraft and, the right to buy and lease back one aircraft engine; liquidated its investment in Cambodia Air, the national airline based in Phnom Penh, Cambodia, and collected more than VND860 billion ($36.65 million), a part of the total amount from the deals.

On the HoSE, the carrier’s HVN shares were priced at VND15,150 ($0.64) at the closing session on September 8.