The Covid-19 pandemic stopped Pacific Airlines’ recovery and worsened its financial situation, which is “extremely serious,” its parent company, Vietnam Airlines (VN/HVN), informed shareholders last week.
"The shortfall in cash flow and large overdue debts pose the possibilities of insolvency and termination of operations," the carrier said, adding that it is seeking investors to restructure Pacific.
Speaking about plans to restructure its subsidiary, VN said the investor selection process faced legal and other obstacles due to the fact it is a state-owned enterprise.
If no agreement is reached, its own situation would be at risk, it warned.
It plans to seek shareholders’ approval to amend a clause in its charter to allow the sale of its equity to third parties at the upcoming annual general meeting.
In other words, big consecutive losses have pushed Pacific Airlines (BL) into a very serious condition that its parent career Vietnam Airlines can not handle alone. VN stated that finding a new investor for the career will solve the issue, however, it is not easy as BL is still technically a state-owned enterprise that stakes transferring will have to satisfy many state regulations and require a lot of "complicated procedures".
BL was launched in the early 90s under its recent name (Pacific Airlines) and it is the first-ever joint-stock company airline that was formed in Vietnam, and soon it was assigned as a subsidiary of the state-owned flag career VN. In 2007-2008, Qantas (QF) had decided to invest in BL in order to spread its LCC branding Jetstar across Southeast Asia, and at that point, BL was rebranded as Jetstar Pacific Airlines and eventually became the first Vietnamese LCC. Jetstar Pacific had a relatively good business before Covid and QF's stake in BL also peaked at 30% at that point. In mid-2020, due to losses made by the pandemic, QF decided to withdraw its influence in BL by transferring all of its BL stakes back to the co-shareholder VN, and BL was eventually rebranded back to its initial name Pacific Airlines. Since the VN takeover, despite VN's efforts to restructure BL and revive BL under the "Vietnam Airlines" fame, the impacts of Covid-19 are too severe that VN just realized it could not save BL, and finding a new investor is necessary.
I'm not sure what to say, but it is such a sad story for this ill-fated former Jetstar subsidiary. There are rumors that BL is being acquired by NovaGroup, a Vietnamese conglomerate which works in the real-estate and travel field; but according to what VN has just recently mentioned, everything seems not so easy for BL.