State-run flag carrier Vietnam Airlines could record losses of more than half a billion dollars this year, its shareholders’ meeting revealed.

Shareholders of Vietnam Airlines Corporation approved the 2020 business and production plan on Monday, which noted that consolidated losses will not exceed 15.17 trillion dong ($650 million).

The statement was released at the shareholders’ meeting held in Hanoi on Monday.

Vietnam Airlines aims to gradually restore production and business activities with the target of transporting 14.5 million passengers, making consolidated revenue of nearly 40.6 trillion dong.

Chairman Pham Ngoc Minh said the corporation was grappling with the global aviation crisis caused by the Covid-19 pandemic but has managed to maintain its business and carry out its national duties.

“We still consider this as a challenge to overcome, finding new opportunities, new ways, continuing to assert the position of the national airline leading in the aviation sector, as well as the national brand mission in the business community,” he said.

From the onset of the pandemic, he said, Vietnam Airlines has implemented many urgent response solutions, focusing on adjusting production and business scale, minimising costs, labour reorganisation and adjustment of salary and income policies.

Facing the passenger decrease on domestic and international routes, Vietnam Airlines has stepped up cargo transportation, he added.

“We take advantage of support from the government and partners to maintain production and business activities, overcome the crisis and prepare resources for the recovery and development. We have cut more than five trillion dong thanks to proactive saving,” Minh said.

Nguyen Hong Hien, director of the Committee for Management of State Capital at Enterprises’ Department of Technology and Infrastructure, said the committee acknowledged the efforts of the Board of Directors and employees in many aspects.

“We expect shareholders, especially strategic shareholders and State agencies, to work together to help Vietnam Airlines overcome difficulties and crises, continuing to grow and increase shareholders’ investment value,” Hien said.

The firm also announced it will not pay dividends for 2019 to its shareholders to ensure cash flow and financial balance this year and beyond.

The State owns 86 per cent of Vietnam Airlines and in the context of the global aviation crisis, not paying dividends is a prerequisite for Vietnam Airlines to be considered by credit organisations and banks to reduce prices or extend the payment schedule.

Apart from the gloomy 2020 figures, the firm released some positive news about its 2019 results.

Shareholders recognised many achievements of Vietnam Airlines last year, with consolidated revenue a record of more than 100 trillion dong, up 1.4 per cent year-on-year and its largest consolidated pre-tax profit ever at 3.39 trillion dong, up 2.3 per cent over the same period.

Of the figures, the parent company contributed 74.7 trillion dong in revenue and 2.9 trillion dong in pre-tax profit, increasing nearly 20 per cent year-on-year and 8.3 per cent higher than the target set at the 2019 shareholders’ meeting.

The corporation sent nearly 7.93 trillion dong to the State budget, 18 per cent more than the previous year.

The 2019 results significantly improved the financial ratios of Vietnam Airlines, enhancing capital autonomy and financial security. The debt to equity ratio decreased to 2.7:1, continuing the downward trend compared to previous years.

In the year, Vietnam Airlines conducted 135,000 safe flights transporting 22.9 million passengers, with four-star international standard service quality. The flight on-time-punctuality (OTP) was approximately 90 per cent.

Vietnam Airlines officially listed its HVN shares on the Ho Chi Minh City Stock Exchange (HoSE) on May 7, 2019.

The listing of shares on HoSE has helped the corporation improve its reputation, information transparency, stock liquidity increase and access new resources of capital mobilisation from investors.

The corporation also marked a record with a fleet of 100 aircraft and nearly 100 routes covering the world.

With the addition of 22 new modern-generation aircraft including Boeing 787-10 Dreamliner, Airbus A350-900, A321neo and 10 routes, 2019 was the year Vietnam Airlines received the highest volume of aircraft in history and opened the highest volume of routes in the past five years.

Along with expanding aircraft resources and flight network, the airline improved service quality by pioneering the integration of digital technology into flight experiences, such as launching mobile apps and automatic check-in services, wireless entertainment system across Airbus A321neo fleet, internet connection service on Airbus A350 aircraft and Vietnam Airlines-FPT Play app.

At the meeting, shareholders discussed and approved important contents, including a report on business results last year and the main targets of production and business plans of this year; audited financial statements for last year and plan for the distribution of profits and dividends; plan to consolidate the Board of Directors and Supervisory Board, and the sale of A321CEO vessel manufactured in 2007.

On April 16, Cambodian State Secretariat of Civil Aviation (SSCA) spokesman Sin Chansereyvutha told the Council of Ministers that Vietnam Airlines had sold its 49 per cent stake in national flag carrier airline Cambodia Angkor Air to undisclosed buyers, in a sale that included five A321 aircrafts with a total liquidation value of $37 million.