Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
User avatar
Antaras
Topic Author
Posts: 924
Joined: Thu Aug 15, 2019 6:18 am

Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 3:11 am

https://zingnews.vn/kiem-toan-nghi-ngo-kha-nang-hoat-dong-lien-tuc-cua-vietnam-airlines-post1126644.html
Vietnam Airlines and Deloitte just release their financial report on the first half of 2020.
After the first half of the year, the airline's revenue reached VND 24,944 billion (~$1.069.231,05), down more than half over the same period due to the influence of Covid-19 translation. This is also the main reason why the company saw a net loss of 6,678 billion dong (~$286.256,61) after the first 2 quarters of the year, while the same period profit was 1,517 billion dong (~$65.027,15).

However, this is the main problem:
However, in this report, the auditor emphasized that the short-term debt of Vietnam Airlines has exceeded short-term assets, with the amount of 18,444 billion VND (by the end of June). During the last operating period, this airline also recorded a loss of 6,678 billion dong and net cash flow from operating activities was negative 5,362 billion.

According to Deloitte, these conditions, coupled with a debt of over VND 18,000 billion in excess of short-term assets, indicate the existence of uncertainties that could significantly affect the ability to operate continuously of the Vietnamese biggest carrier.


To save the situation, VN's shareholders agreed to sell up to 9 A321-231ceo built-in 2007-2008. Besides that, VN was also hinting that it will have a new investor:
Currently, VN is in the process of negotiating with a partner to complete the signing of a formal agreement to sell shares in an associate. Based on the approval of the competent authorities and the results of the current negotiations, the business expects the transfer to be completed this year.


One year ago, VN was still a worthy carrier with high profit and ambitious plans. Now... hope that best thing will happen to this 70 years old carriers. VN is currently having around 100 airframes, which 70 of them are A321ceo/neo and the remains are A350 and B787.

Image
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.
 
Antarius
Posts: 2544
Joined: Thu Apr 13, 2017 1:27 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 3:27 am

Who's willing to take 12 year old a321ceo right now? They can't be worth very much given the excess capacity everywhere.
2020: SFO DFW IAH HOU CLT MEX BIS MIA GUA ORD DTW LGA BOS LHR DUB BFS BHD STN OAK PHL ISP JFK SJC DEN SJU LAS TXL GDL
 
User avatar
Antaras
Topic Author
Posts: 924
Joined: Thu Aug 15, 2019 6:18 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 3:47 am

Antarius wrote:
Who's willing to take 12 year old a321ceo right now? They can't be worth very much given the excess capacity everywhere.

If VN could sell their 15-year-old A321 in April then it should find no trouble selling the 12-year-old A321s ??????????
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.
 
Antarius
Posts: 2544
Joined: Thu Apr 13, 2017 1:27 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 3:59 am

Antaras wrote:
Antarius wrote:
Who's willing to take 12 year old a321ceo right now? They can't be worth very much given the excess capacity everywhere.

If VN could sell their 15-year-old A321 in April then it should find no trouble selling the 12-year-old A321s ??????????


Potentially. But for how much did they sell it?
2020: SFO DFW IAH HOU CLT MEX BIS MIA GUA ORD DTW LGA BOS LHR DUB BFS BHD STN OAK PHL ISP JFK SJC DEN SJU LAS TXL GDL
 
User avatar
Antaras
Topic Author
Posts: 924
Joined: Thu Aug 15, 2019 6:18 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 4:07 am

Antarius wrote:
Antaras wrote:
Antarius wrote:
Who's willing to take 12 year old a321ceo right now? They can't be worth very much given the excess capacity everywhere.

If VN could sell their 15-year-old A321 in April then it should find no trouble selling the 12-year-old A321s ??????????


Potentially. But for how much did they sell it?

As VN sold 5 A321 (15 years old) with a total price of $37 million, I predict that VN will sell that 9 younger airframes for $60-70 million (VN didn't announce the price and buyer yet)
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.
 
tommy1808
Posts: 13546
Joined: Thu Nov 21, 2013 3:24 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 6:02 am

Antaras wrote:
Antarius wrote:
Who's willing to take 12 year old a321ceo right now? They can't be worth very much given the excess capacity everywhere.

If VN could sell their 15-year-old A321 in April then it should find no trouble selling the 12-year-old A321s ??????????


wouldn´t they have pretty fresh heavy maintenance with that age? That may make them more attractive than a couple of years younger.

best regards
Thomas
Well, there is prophecy in the bible after all: 2 Timothy 3:1-6
 
Someone83
Posts: 4910
Joined: Sun Sep 17, 2006 5:47 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 6:20 am

Well, Vietnam Airlines will probably be saved by the Vietnamese government, if needed
 
smi0006
Posts: 2575
Joined: Wed Jan 16, 2008 7:45 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 11:06 am

Someone83 wrote:
Well, Vietnam Airlines will probably be saved by the Vietnamese government, if needed


Exactly VN is a key social and economic driver they can’t be looked at as a stand alone business as their contribution to the broader Vietnamese economy is great, just like EK,QR. And their role now more than ever is to bring people to Vietnam, enable domestic movements facilitating cargo and trade - not to make a profit. They have also just acquired the remainder of JetStar Pacific so one less domestic competitor to worry about. Very different to public ally listed companies, but just a different approach to the economy and development
 
MIflyer12
Posts: 8310
Joined: Mon Feb 18, 2013 11:58 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 11:26 am

This thread from just four months ago: Vietnam Airlines wants to Speed Up its Order of 50 Narrowbodies

viewtopic.php?t=1444711

Absence of money and big new orders do not go together.
 
User avatar
Antaras
Topic Author
Posts: 924
Joined: Thu Aug 15, 2019 6:18 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 12:33 pm

MIflyer12 wrote:
This thread from just four months ago: Vietnam Airlines wants to Speed Up its Order of 50 Narrowbodies

viewtopic.php?t=1444711

Absence of money and big new orders do not go together.

Yeah, VN sees the potential if it could order the aircraft now and receive them in the next 3 years. However it can not explain where it could find the money to order airframes (gov bailout)???
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.
 
raylee67
Posts: 922
Joined: Mon Oct 24, 2011 11:06 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 1:25 pm

Isn't VN majority owned by the government? The latest info I can find says that it is over 86% owned by the government.

And it was healthy before the crisis, saving it is going to be much easier than saving many other carriers in the region, such as MH,GA, TG or OZ. Also, Vietnam is in a relatively good shape compare regarding the crisis.
319/20/21 332/33 342/43/45 359/51 388 707 717 732/36/3G/38/39 74R/42/43/44/4E/48 757 762/63 772/7L/73/7W 788/89 D10 M80 135/40/45 175/90 DH1/4 CRJ/R7 L10
AY LH OU SR BA FI LX
AA DL UA NW AC CP WS FL NK PD
CI NH SQ KA CX JL BR OZ TG KE CA CZ NZ JQ RS
 
LG777
Posts: 32
Joined: Sat Jul 31, 2010 10:48 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 1:27 pm

Antaras wrote:
MIflyer12 wrote:
This thread from just four months ago: Vietnam Airlines wants to Speed Up its Order of 50 Narrowbodies

viewtopic.php?t=1444711

Absence of money and big new orders do not go together.

Yeah, VN sees the potential if it could order the aircraft now and receive them in the next 3 years. However it can not explain where it could find the money to order airframes (gov bailout)???


Short term assets are not only cash. It can be many other receivables.

Also, when ordering new aircrafts, it depends on how you purchase. Most airlines place a deposit (ie 10% of the purchase price). If purchased, you would find them In the books this is translated as a long term asset.

Deloitte comment does not mean that there is no cash. It means that if the company need to pay all short term liabilities on concise notice, there is no sufficient money to pay them. However, short term means less than one year. It means anything due from within one up to 364 days. The breakdown of the liabilities and the possibilities that the company has to extend their maturities would be more telling than the mentioned paragraph.

It's not a good position, and it's not the end of the road, but the management needs to take actions to manage these short terms liabilities.
 
peterinlisbon
Posts: 1826
Joined: Wed Feb 01, 2006 3:37 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 1:38 pm

If they actually own that huge fleet of planes, then it's hard to see how they could go bankrupt.
 
User avatar
Antaras
Topic Author
Posts: 924
Joined: Thu Aug 15, 2019 6:18 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 1:53 pm

peterinlisbon wrote:
If they actually own that huge fleet of planes, then it's hard to see how they could go bankrupt.

Why not???
Yes, they can easily sell dozens of their owned airframes to save themselves. However, nothing is sure yet, especially when the Vietnamese government seems doesn't like a bailout for VN.

VN might NOT bankrupt, yup, but everything can happen. Especially when this legacy carrier has to face competition from Vietjet and Bamboo.
VJ made me surprise by making a profit in the first half of 2020.
Last edited by Antaras on Wed Sep 02, 2020 1:56 pm, edited 1 time in total.
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.
 
User avatar
Polot
Posts: 10741
Joined: Thu Jul 28, 2011 3:01 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 1:55 pm

peterinlisbon wrote:
If they actually own that huge fleet of planes, then it's hard to see how they could go bankrupt.

I mean sure, but if they have to sell all their planes then yay they are not bankrupt but then what are they suppose to fly?
 
peterinlisbon
Posts: 1826
Joined: Wed Feb 01, 2006 3:37 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 1:58 pm

Polot wrote:
peterinlisbon wrote:
If they actually own that huge fleet of planes, then it's hard to see how they could go bankrupt.

I mean sure, but if they have to sell all their planes then yay they are not bankrupt but then what are they suppose to fly?


With each plane worth up to 100 million dollars, they can just sell them off one by one as needed and reduce the fleet until the crisis is over. Covid isn't going to last much past the end of the year. Death rates are down 90% since masks were introduced and vaccines are coming soon.
 
eamondzhang
Posts: 1841
Joined: Thu Sep 23, 2010 8:23 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 2:26 pm

peterinlisbon wrote:
Polot wrote:
peterinlisbon wrote:
If they actually own that huge fleet of planes, then it's hard to see how they could go bankrupt.

I mean sure, but if they have to sell all their planes then yay they are not bankrupt but then what are they suppose to fly?


With each plane worth up to 100 million dollars, they can just sell them off one by one as needed and reduce the fleet until the crisis is over. Covid isn't going to last much past the end of the year. Death rates are down 90% since masks were introduced and vaccines are coming soon.

And they can always do lease back deals if they're really needing the plane.

Michael
 
User avatar
Polot
Posts: 10741
Joined: Thu Jul 28, 2011 3:01 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 2:31 pm

peterinlisbon wrote:
Polot wrote:
peterinlisbon wrote:
If they actually own that huge fleet of planes, then it's hard to see how they could go bankrupt.

I mean sure, but if they have to sell all their planes then yay they are not bankrupt but then what are they suppose to fly?


With each plane worth up to 100 million dollars, they can just sell them off one by one as needed and reduce the fleet until the crisis is over. Covid isn't going to last much past the end of the year. Death rates are down 90% since masks were introduced and vaccines are coming soon.

None of the planes they fully own are worth anywhere near $100 million a piece.
 
User avatar
Spacepope
Posts: 4719
Joined: Tue Dec 28, 1999 11:10 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 2:44 pm

tommy1808 wrote:
Antaras wrote:
Antarius wrote:
Who's willing to take 12 year old a321ceo right now? They can't be worth very much given the excess capacity everywhere.

If VN could sell their 15-year-old A321 in April then it should find no trouble selling the 12-year-old A321s ??????????


wouldn´t they have pretty fresh heavy maintenance with that age? That may make them more attractive than a couple of years younger.

best regards
Thomas


Heavy checks coinciding with freighter conversion are pretty common...
The last of the famous international playboys
 
rampbro
Posts: 546
Joined: Wed Nov 28, 2012 4:00 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 3:36 pm

peterinlisbon wrote:
Polot wrote:
peterinlisbon wrote:
If they actually own that huge fleet of planes, then it's hard to see how they could go bankrupt.

I mean sure, but if they have to sell all their planes then yay they are not bankrupt but then what are they suppose to fly?


With each plane worth up to 100 million dollars, they can just sell them off one by one as needed and reduce the fleet until the crisis is over. Covid isn't going to last much past the end of the year. Death rates are down 90% since masks were introduced and vaccines are coming soon.


That's an optimistic scenario, so may be not the greatest one to plan against.
 
Antarius
Posts: 2544
Joined: Thu Apr 13, 2017 1:27 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 3:39 pm

peterinlisbon wrote:
Polot wrote:
peterinlisbon wrote:
If they actually own that huge fleet of planes, then it's hard to see how they could go bankrupt.

I mean sure, but if they have to sell all their planes then yay they are not bankrupt but then what are they suppose to fly?


With each plane worth up to 100 million dollars, they can just sell them off one by one as needed and reduce the fleet until the crisis is over. Covid isn't going to last much past the end of the year. Death rates are down 90% since masks were introduced and vaccines are coming soon.


The list price (albeit a couple years old) from Airbus is 118 million for an A321ceo. Source: https://www.airbus.com/content/dam/corp ... s-2018.pdf .This does not include the typical discounts etc.

There is no chance a 12 year 321ceo is worth even close to 100 million.
2020: SFO DFW IAH HOU CLT MEX BIS MIA GUA ORD DTW LGA BOS LHR DUB BFS BHD STN OAK PHL ISP JFK SJC DEN SJU LAS TXL GDL
 
TheWorm123
Posts: 256
Joined: Sun Oct 06, 2019 8:29 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 3:45 pm

Even if the airline was try to sell their planes, there aren’t that many airlines with free cash to buy planes at the moment.
B752 B753 A332 A321 B738
 
User avatar
lightsaber
Moderator
Posts: 20349
Joined: Wed Jan 19, 2005 10:55 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Wed Sep 02, 2020 4:50 pm

Antaras wrote:
Antarius wrote:
Antaras wrote:
If VN could sell their 15-year-old A321 in April then it should find no trouble selling the 12-year-old A321s ??????????


Potentially. But for how much did they sell it?

As VN sold 5 A321 (15 years old) with a total price of $37 million, I predict that VN will sell that 9 younger airframes for $60-70 million (VN didn't announce the price and buyer yet)

There are opportunistic buyers.

Leeham link on values if 15 year old aircraft. A 15 year old A321CEO dropped 21% since the start of Covid19 lockdowns.

https://leehamnews.com/2020/06/30/hotr-values-plunge/

Another link showing 5 year old A321CEO dropped only 9% in value.

Keep in mind this isn't drop off list price.
It also isn't the same aircraft.
In February, a February 2015 build was worth x.

In May, a May 2015 build A321 was worth 0.91x, the February A321 build is probably now worth 0.90x.

All valuations assume a certain time to overhaul. If fewer months, hours, cycles, there is a discounting process to reflect wear and tear. e.g., another thousand cycles reduces the value by about a half million for airframe and engines combined. An engine overhaul or aircraft heavy maintenance visit boosts the value, at most by the value of the work, but in this market, probably less.

Lightsaber
Winter is coming.
 
User avatar
Antaras
Topic Author
Posts: 924
Joined: Thu Aug 15, 2019 6:18 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Sun Sep 06, 2020 5:19 am

VN's stock on Ho Chi Minh Stock Exchange (HoSE: HVN) was banned from margin trading.

https://e.vnexpress.net/news/business/economy/vn-index-hits-six-month-peak-4156407.html
Notably, the HVN ticker of national carrier Vietnam Airlines was banned from margin trading by HoSE, as a result of having suffered a post-tax loss of Đ6.7 trillion (~$288.893.012) in the first half of 2020.
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.
 
moa999
Posts: 968
Joined: Tue Mar 13, 2018 6:37 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Mon Sep 07, 2020 12:11 am

lightsaber wrote:
There are opportunistic buyers.


Any actual trades on the past six months?
 
User avatar
lightsaber
Moderator
Posts: 20349
Joined: Wed Jan 19, 2005 10:55 pm

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Mon Sep 07, 2020 1:05 am

moa999 wrote:
lightsaber wrote:
There are opportunistic buyers.


Any actual trades on the past six months?

I only know cargo with LH selling MD-11 and buying 777F.

I could just br restructuring of financing: https://www.bing.com/amp/s/www.forbes.c ... comes/amp/

Scrap aircraft values are low.
Vietnam is an interesting test case.
Winter is coming.
 
moa999
Posts: 968
Joined: Tue Mar 13, 2018 6:37 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Mon Sep 07, 2020 1:33 am

Everyone is short on cargo aircraft, so no surprise demand is there.

Whereas I suspect every passenger airline had plenty of capacity at the moment, so if you buy an aircraft it's just going to sit empty accruing interest and other charges

If Covid continues for 12+ months that 'good' deal suddenly isn't so good anymore
 
EBT
Posts: 79
Joined: Tue Mar 27, 2018 1:04 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Mon Sep 07, 2020 2:22 am

Some of the lessors, such as BOC Aviation and StanChart/Pembroke, have been active in the sale and leaseback space. It seems that where those transactions are occurring that the focus is more on the quality of the credit (ie, if the airline will pull through) rather than the assets (aircraft). In the case of VN, I imagine that most lessors would treat them as a state-owned company that the government would rescue, so they may get favourable terms.
 
User avatar
Antaras
Topic Author
Posts: 924
Joined: Thu Aug 15, 2019 6:18 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Mon Sep 07, 2020 2:35 am

EBT wrote:
Some of the lessors, such as BOC Aviation and StanChart/Pembroke, have been active in the sale and leaseback space. It seems that where those transactions are occurring that the focus is more on the quality of the credit (ie, if the airline will pull through) rather than the assets (aircraft). In the case of VN, I imagine that most lessors would treat them as a state-owned company that the government would rescue, so they may get favourable terms.

VN doesn't want to sale n lease back those airframes.

VN just wants to completely sell the airframes as it won't need those frames anymore.
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.
 
User avatar
Antaras
Topic Author
Posts: 924
Joined: Thu Aug 15, 2019 6:18 am

Re: Deloitte doubted the ability of Vietnam Airlines to operate continuously

Mon Sep 07, 2020 5:15 pm

lightsaber wrote:
moa999 wrote:
lightsaber wrote:
There are opportunistic buyers.


Any actual trades on the past six months?

I only know cargo with LH selling MD-11 and buying 777F.

I could just br restructuring of financing: https://www.bing.com/amp/s/www.forbes.c ... comes/amp/

Scrap aircraft values are low.
Vietnam is an interesting test case.

It is different. There must be a large demand for Freighters, but passengers airframes...nah.
The problem is not the carriers' financial status (VN itself plans to order 50 more airframes), but the demand.
Edit signature
This is a block of text that can be added to posts you make. There is a 255 character limit.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos