Vietnam Airlines Unveils 2024 Business Plan and Growth Strategies at Annual Shareholders’ Meeting

Written By: Pappu Mazumder

Pappu Mazumder

I bring a journalist’s perspective to the travel and tourism industry, contributing to Travel and Tour World through engaging storytelling, industry insights, and creative ideas. I focus on exploring emerging trends, highlighting key developments, and sharing meaningful stories that connect the global travel community while inspiring curiosity, innovation, and discovery.

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June 24, 2024 22:47 GMT+5:30

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Today, Vietnam Airlines (HoSE: HVN) successfully held its 2024 Annual General Shareholders’ Meeting, attended by representatives from the Commission for the Management of State Capital at Enterprises (CMSC) and existing shareholders.

During the meeting, shareholders discussed and approved crucial agendas, including the 2024 business plan, the audited 2023 financial statements, the 2023 Board of Directors’ activity report, and the 2024 orientation plan. Vietnam Airlines recorded a consolidated revenue of VND 93,265 billion in 2023, nearly 30% higher than the previous year and nearing pre-pandemic peak levels. In 2024, the airline aims to balance revenue and expenditure with flexible solutions.

The aviation industry faced numerous challenges in 2023, such as geopolitical conflicts, supply chain disruptions, and a global economic downturn. Fuel prices remained high at over USD 105 per barrel, and unfavorable interest and exchange rates impacted Vietnam’s aviation operations. Domestically, economic growth slowed, leading to reduced travel demand and decreased consumer purchasing power. While international markets like Australia, India, and Southeast Asia showed positive signs, key markets in Northeast Asia recovered slower than expected.

Despite these difficulties, Vietnam Airlines achieved remarkable business results in 2023, transporting over 24.1 million passengers and 230,000 tons of cargo, up 16.4% and 5.8% year-on-year, respectively. The airline’s positive operational results enabled it to achieve a consolidated revenue of VND 93,265 billion, nearly 30% higher than in 2022 and approaching 2019 peak levels. Pre-tax consolidated losses decreased by VND 5,583 billion, halving compared to 2022.

Despite increased operational costs, Vietnam Airlines continuously improved its services, receiving positive customer feedback and prestigious international awards, including “Global 5-Star Airline” by the Airline Passenger Experience Association (APEX), Top 20 Safest Airlines by AirlineRatings, and World Travel Awards in four categories: “Asia’s Leading Airline – Economy Class,” “Asia’s Leading Cultural Airline,” “Asia’s Leading Cabin Crew,” and “Asia’s Leading Inflight Magazine.”

Vietnam Airlines implemented comprehensive solutions aligned with market developments to achieve these results. The airline restored its international route network to 90% of 2019 levels, adding new routes like Hanoi/Ho Chi Minh City to Mumbai, Hanoi to Melbourne, and Ho Chi Minh City to Perth. The domestic route network continued to operate at pre-2019 levels. The airline effectively carried out commercial, advertising, and communication activities, increasing revenue and enhancing its brand image.

Additionally, Vietnam Airlines focused on cost management and savings. Besides reducing costs according to production scale, the corporation implemented cost-saving measures, negotiated price reductions, and deferred payments, cutting costs by an estimated VND 3,200 billion. Vietnam Airlines also proactively restructured loans and flexibly used short-term borrowing.

Notably, the airline enhanced its service strategy, incorporating new technologies into various processes and service touchpoints, resulting in improved productivity and customer satisfaction. In 2023, the Customer Satisfaction Index (CSI) exceeded targets with a domestic CSI of 4.17/5 and an international CSI of 4.0/5.

Dang Ngoc Hoa, Chairman of Vietnam Airlines, said: “In 2024, challenges continue to face the aviation sector such as macro-economic uncertainties. Based on business environment forecasts, Vietnam Airlines has set key objectives, directions, and tasks. The company will focus on restructuring assets, capital, investment portfolio, organisational structure and corporate governance reforms. The primary goal is to reduce losses and balance revenue and expenditure in 2024.”

In 2024, the global economic and political landscape will remain challenging with prolonged geopolitical conflicts and high fuel prices at USD 104 per barrel. USD interest rates will remain high, affecting exchange rates and input costs. Global passenger volume is forecasted to fully recover to 2019 levels, but the Asia-Pacific region will need more time, especially Northeast Asia. Macro risks and airport infrastructure overloads remain. Pratt & Whitney’s global engine recalls are causing aircraft shortages, impacting operations.

Vietnam’s macroeconomic outlook shows positive signs, with the economy expected to grow steadily and the domestic aviation market growing by 6-8%. This sets a foundation for Vietnam Airlines to further reduce losses and balance revenue and expenditure.

To achieve this goal, Vietnam Airlines will implement comprehensive solutions across all business aspects. The airline will boost its network expansion with new routes to Europe and Southeast Asia in 2024. In the domestic market, Vietnam Airlines will adjust flight frequencies to capitalize on demand, maintain a strong market share on key routes, and increase capacity on tourism routes. The airline will proactively develop operating plans based on various scenarios, enhancing product and price management capabilities.

For its fleet, Vietnam Airlines will focus on investing in narrow-body aircraft projects and converting the configuration of A321ceo aircraft to improve operational efficiency, meeting market demand, and aligning with the fleet restructuring plan. The corporation will also complete preparations for investment in a comprehensive service complex at Long Thành International Airport to move into the investment implementation phase.

In terms of service, Vietnam Airlines continues to elevate its 5-star quality standards, aiming to inspire and promote new initiatives. The airline will tailor exceptional customer experiences for different key routes, improve work processes, and apply digital transformation measures to enhance management efficiency and customer experience.

Vietnam Airlines will maintain stringent cost-saving and cost management programs, seeking opportunities to negotiate reductions, deferrals, and payment postponements. To maintain cash flow balance, the corporation will expedite capital divestment and implement measures to optimize costs, revenue, and financial management effectively.

The airline will continue its restructuring efforts to overcome the impacts of the COVID-19 pandemic and lay the foundation for sustainable development. The restructuring solutions focus on completing capital divestment from some subsidiaries, presenting to authorities the plan to extend the repayment period for re-lending loans, and promoting organizational restructuring, reducing intermediate levels, and investing in technology and digital transformation to improve labor productivity and resource quality.