Vietnam Airlines says tough times ahead, cuts loom
HANOI - Mounting losses has
forced Vietnam's national flag carrier to reduce
flight frequencies and cut the number of planes it
operates, officials said on Wednesday.
Vietnam Airlines also plans to take over full
maintenance of its 10 Airbus A320s from July 1
and increase flying hours for its remaining planes,
they added.
``Based on the regional situation, the bad impact
of the financial crisis will continue to affect the
aviation industry,'' a Vietnam Airlines official told
Reuters.
``Growth has slowed and we will suffer from
continued slowdown. This means Vietnam
Airlines might continue to face losses in 1998,'' he
added.
The official said that estimated losses in 1997
were between 40 billion and 50 billion dong
($3.08 million to $3.85 million) and that the
company could move further into the red this
year.
``The company is trying its best with a series of
measures to reduce the losses and balance
expenditures and revenues.''
``One of the most important measures is
providing domestic maintenance. Maintenance for
all Airbus planes will be done in Vietnam from
July 1998 and we hope to do the same for
Boeing planes from beginning of 1999,'' he said.
Sean Lee, regional communications director for
Airbus Industrie, said the plan had always been
for Vietnam Airlines to assume responsibility for
the maintenance of its Airbus A320s from July 1.
``July 1 was always the date we've been working
towards for flight operations and maintenance of
the aircraft, so everything is moving towards a
smooth transition,'' he said by telephone from
Singapore.
An airline industry source said Vietnam Airlines
had hired around 13 expatriates at management
level who would help oversee the new
responsibilities for maintenance and engineering
operations for the Airbus A320s.
``(Maintenance) is not a sudden decision they've
made in response to market difficulties ... it was
always planned,'' he said.
He added that Vietnam Airlines would be able
to do annual airframe checks but would not have
the capability for engine maintenance.
In March, the government instructed Vietnam
Airlines to draft plans to restructure and
streamline its operations as losses had mounted
and passenger numbers declined.
A senior company executive said the airline had
returned one of its four Boeing 767s when its
lease expired last month, and had reduced
frequencies on some regional routes.
Flight frequency to Seoul from Hanoi and Ho Chi
Minh City had been cut 50 percent, and flights to
Manila had been indefinitely suspended, he
added.
``We have downgraded most of our flights to
Hong Kong from Boeing 767s to the smaller
Airbus A320 and ... we cut the frequency from
Hanoi by two flights from 11 down to nine a
week,'' the official said, adding that flights to
Taiwan had also been reduced.
``Japan remains unchanged but the situation is
getting difficult. We are not planning a reduction
in flights to Japan but the market situation is
getting worse,'' he said.
The airline, one of communist Vietnam's major
success stories, faced a downturn last year when
passenger growth slowed to just under two
percent and revenues slumped as the local
currency, the dong, depreciated.
Vietnam Airlines with three Boeing 767-300s,
10 Airbus A320s, six ATR-72s and two Fokker
F70s, has one of the youngest fleets in Asia.
It grounded its last remaining Soviet-built aircraft
after one of its Tupolev 134Bs crashed last
September in Phnom Penh, killing 64 people. The
airline said in May that one Tu-134B had been
put back in service for carrying cargo on
domestic and international routes.
By Andy Soloman - REUTERS, June 3, 1998.
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