Vietnam Airlines reports loss of 5 million dollars

Jul 15, 2008, 11:23 GMT

Hanoi - Vietnam Airlines on Tuesday reported a loss of 83 billion dong (5 million dollars) in the first six months of this year, due to high fuel prices.

In that period, the state-run carrier's revenues grew 28 per cent to 12.1 trillion dong (720 million dollars), but its total expenditures reached 12.18 trillion dong (725 million dollars), the company said in a statement released Tuesday.

It said the fuel price in the first half of this year was 38 per cent higher than what it had predicted. The price of ZA1 fuel it was buying in June was 180 dollars per barrel, nearly double what the company was expecting.

'The high jet fuel price has seriously affected the operations of Vietnam Airlines,' the company said. 'Spending on fuel in the first six months of this year was 1.4 trillion dong (84 million dollars) higher than planned.'

'This is the first time Vietnam Airlines has incurred losses,' a company official, who requested anonymity, told Deutsche Presse-Agentur dpa in a telephone interview.

The official said that Vietnam Airlines was not planning to cut down on flights to make up for the loss.

'In the last six months of the year, we will try to further cut costs by 10-20 percent, delay investment projects and suspend the recruitment of more employees,' the official said.

The airline transported more than 4.43 million passengers in the first six months of this year, up 17 per cent year-on-year. It targets to transport 9 million passengers in 2008.

Now operating 47 aircraft, Vietnam Airlines plans to expand its fleet to 110 airplanes by 2020.

According to its development strategy to 2020, Vietnam Airlines will need 15 billion dollars to purchase new planes and build and upgrade its infrastructure.