The Vietnamese LCC has announced its 3Q2020 financial results "turn out to be better than expected and are deemed positive compared to other airlines in Vietnam and the world". The carrier recorded a debt to equity ratio of 0.74, among "the lowest" in the global aviation industry.
This will enable VietJet to proceed with its mid and long term financing plans in order to strengthen its financial position. The airline's capital flows are also significantly increased thanks to the full resumption of its domestic flight network.
VietJet is using its low-fares formula to help stimulate demand, most recently to support the resumption of its Da Nang domestic schedules, suspended following the unlikely COVID19 outbreak in that city in late Jul-2020, which had disrupted a lengthy period of COVID-free performance in Vietnam. Again, since Aug-2020, the country is experiencing only single digit daily cases, with none on some days and activity is starting to return to pre-Jul-2020 levels.
In Sep-2020 VietJet resumed four times daily Da Nang-Ho Chi Minh and three times daily Da Nang-Hanoi service, and from last month the frequency was increased. The airline has been offering 1.8 million ultra-low tickets priced from VND0 (only government taxes payable) to promote the expansion and for travel through to 31-May-2021.
VietJet has seen the benefits of low, or even zero, fare initiatives in the past. Back in late 2019 and early 2018 it pursued an aggressive strategy of offering millions of seats at zero dollar fares as the Vietnamese airline focused on market share and ancillaries.
The idea of the zero dollar promotions was to raise brand awareness and get passengers to fly during off peak periods – when load factors would not normally be 100%. The concept is that a passenger not paying a fare is still likely to spend on ancillaries while with an empty seat there are no opportunities for ancillary sales … and VietJet has a large ancillary offering and has experience generating strong revenues from them.
Following near closure in Apr-2020, VietJet recovered – in capacity terms – to above 2019 levels in early Jun-2020 and stayed up until the Da Nang outbreak quickly slowed national operations. It is now gradually restoring capacity but overall levels remain down around a quarter on 2019, albeit domestic activity is now back again above last year. International activity though remains limited to special charter services.
VietJet Air is a low-cost carrier based in Hanoi Noi Bai International Airport, Vietnam. The carrier began operating on 25-Dec-2011, after several delayed attempts, initially with 3 A320 aircraft to Ho Chi Minh City and Da Nang. VietJet had planned to utilise the AirAsia brand after receiving an investment from the Malaysian LCC but went ahead with the VietJet brand after AirAsia was denied regulatory approvals. The carrier operates services across Asia. VietJet Air issued an IPO on the Ho Chi Minh City Stock Exchange on 28-Feb-2017, becoming the first airline in Vietnam to list on the exchange (HOSE: VJC). The company chartered capital of VND30 trillion (USD1.3 billion) at VND90,000 (USD3.95) per share.
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