HANOI -- Vietnam's National Assembly on Tuesday unanimously approved a 12 trillion dong ($520 million) rescue plan for cash-strapped flag carrier Vietnam Airlines, wrapping up the final day of the parliamentary session.
"Vietnam Airlines is working on a restructuring plan. It will submit the plan to the government soon," said Nguyen Hanh Phuc, chairman of the Office for the National Assembly.
Like airlines across the world, Vietnam's national carrier has been hard hit by the travel slump brought on by the COVID-19 pandemic.
The rescue plan allows the State Bank of Vietnam, the country's central bank, to refinance and extend credit deadlines, but no more than twice, for the airline.
The carrier will issue 8 trillion dong of new shares to existing shareholders. State Capital Investment Corp., the holding company of state-owned enterprises, will buy 85% of those new shares on behalf of the government, according to the agenda issued last week ahead of deliberation, and a note posted on the National Assembly website on Tuesday.
The remainder of 4 trillion dong will be made up of soft loans. Further details of the rescue package as well as the carrier's restructuring plans were not made available to the press.
"Vietnam Airlines continues to work on solutions to reduce losses, implement effective production and business activities and pay attention workers' benefits," according to the National Assembly website.
CEO Duong Tri Thanh in July told the government that the airline would have difficulty sustaining its business without 12 trillion dong in emergency funds by the end of August.
Vietnam Airlines reported a loss of 10.7 trillion dong in the first nine months of this year. Trinh Hong Quang, Vietnam Airlines deputy director, said in a meeting earlier this month that the company was trying to keep losses to below 13 trillion dong this year but expects similar hemorrhaging in 2021 if international aviation fails to recover.
For the nine months, the carrier's operations generated a negative cash flow of 6.2 trillion dong, a reversal from a positive cash flow of 7.8 trillion dong for the year-earlier period, according to its January-September financial report. Total debt now stands at 35 trillion dong, an increase of more than 3 trillion dong from the beginning of the year.
It is hoped that existing investors, including ANA Holdings, will pick up the rest, a local analyst said. But ANA Holdings itself is facing a similarly bleak future. The Japanese airline expects to post its worst-ever net loss, of 500 billion yen ($4.74 billion), for fiscal 2020.