The State Bank of Vietnam (SBV) held a meeting on September 28 with representatives from airlines and credit institutions with outstanding loans in the industry to discuss the launch of the “Aviation Credit Package” aimed at restoring operations in the industry.

Airlines told the meeting they have different needs for financial resources. Based on these, the representative from the Vietnam Aviation Business Association (VABA) proposed two loan packages.

The first is to apply a 0 per cent refinancing rate, as applied to Vietnam Airlines, to other airlines with capital of VND4 trillion ($176.45 million) for a maximum term of three years.

The second is to allow airlines under VABA to borrow from a support package of VND25 trillion ($1.1 billion) featuring preferential interest rates, with the national budget providing 4 per cent interest rate compensation for a term of three to four years.

Meanwhile, banking sector representatives spoke of the difficulties they have endured. They have had to conduct business without profit or were unable to help businesses further as they had reached their credit limit.

According to Mr. Nguyen Quoc Hung, Secretary General of the Vietnam Banks Association, it is impossible to widely refinance airlines, especially in the context of them not earning revenue and operating at a loss. To resolve the difficulties, he said, fiscal policy support needs to be stepped up.
Other experts suggested that airlines undertake more specific action, such as cutting salary costs, restructuring the business apparatus, and self-balancing their finances. They also need short-term and medium-term strategies to prove that they can make up for past losses and be deserving of support.