HA NOI — National air carrier Vietnam Airlines said it would miss its business targets for this year due to increased competition from other carriers in the domestic market.
|A Vietnam Airlines flight taxis on the runway at Noi Bai International Airport in Ha Noi. The air carrier forecasts net profits of nearly VND69 billion (US$3.3 million) for the year, more than VND300 billion ($14 million) below its earlier target for 2012. — VNA/VNS Photo Huy Hung
The airline has asked the Ministry of Transport to adjust the company's business targets due to business difficulties during the first seven months of the year.
Vietnam Airlines forecasts profits of nearly VND69 billion (US$3.3 million) after tax for the year, more than VND300 billion ($14 million) less than expected, or about 20 per cent of their 2012 target.
Its total revenue is estimated to be about VND52 trillion ($2.4 trillion), down by about VND2.4 trillion ($114 million), or 4.6 per cent of their target.
Vietnam Airlines chairman Pham Viet Thanh said the carrier only earned the profit of about VND13 billion ($0.6 million) during the first five months. The first five-month revenue was only VND21 trillion ($1trillion), or about 39 per cent of the year target.
He said the airline had to reduce air fares and flights during the period due to the less than expected demand.
About 78 per cent of tickets had been sold during the first five months, which was nearly 3 per cent lower than targeted and also lower than the same period last year.
Even in July, the peak tourism month of the year, the revenue earned from the domestic market either decreased by 2.5 per cent compared to the same period last year or fell far short of the target.
The airline blames fierce competition from new air carrier Vietjet Air as one of the reasons for the missed targets due to a loss of market share, especially for the two major routes from Ha Noi to HCM City and from HCM City to Da Nang.
Another factor was that VNA will have to spend up to $6 million to establish a reserve fund after its merger with Jetstar Pacific in February, he said.
The missed targets may make it difficult for Vietnam Airlines to reach its target of earning at least $200 million after launching its initial public offering (IPO) slated for no later than the end of 2013. — VNS