ACV tries not to lose money

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Covid-19 not only affects business operations in 2020, but also affects entire strategy and plan of mid-term development investment to 2025 of ACV. Source: Internet.

Loss of more than 350 billion VND

In the second quarter of 2020, ACV's revenue was only 1,046 billion VND, down 77% compared to the second quarter of 2019, after-tax profit hit a negative level of more than 350 billion VND, in contrast to the profit situation of up to 1,703 billion VND in the same period last year.

Revenue from providing aviation services dropped sharply by 78.5% to 771 billion VND. Revenue from non-aviation services such as leasing of premises, advertising and internal port infrastructure decreased 58% to 215.5 billionVND. Revenue from providing aviation services dropped by 78.5% to 771 billion VND. ACV's joint ventures and associates (mainly related to the aviation sector) also recorded an 82% decrease in interest to 26 billionVND.

ACV has tried to cut costs in any way, including using generators during a time of oil price plunge and will continue to tighten costs.

According to ACV, most of the company's business targets decreased in the last quarter due to the impact of the Covid-19 pandemic. Meanwhile, the increase in financial revenue wasdue to the increase in bank deposits compared to the same period. ACV still recorded revenue of more than 570 billion from financial activities (mainly interest from bank deposits), up 28%. However, the deposit interest is not enough to cover all expenses and losses incurred in the second quarter of ACV.

Due to the impact of Covid-19, in Vietnam, the number of passengers through the airport fell19% in the first quarter and decreased 72% in the second quarter. Ofwhich, international visitors fell 99% in the second quarter and domestic tourists decreased 58%. ACV's major source of revenue is from providing services to international markets, so although ACV has cut a series of costs such as cost of goods sold, cost of sales and business management, it still not can offset the sharp decline in revenue. In the same period last year, this business earned 1,700 billion VND, and the first quarter of this year profit was 1,550 billion VND after tax. Thanks to that, accumulated the first half of this year, ACV recorded revenue of 4,680 billion VND, after-tax profit was more than1,190 billion VND.

No loss is also a big challenge

Assessing the impact of the Covid-19 pandemic on ACV's business, Lai XuanThanh, Chairman of ACV's Board of Directors said the impact of the pandemic will not only affect business operations in 2020, but also the entire strategy, development investment plans for mid-term to 2025 of ACV. When the annual cumulative cash flow declined, ACV evaluated and adjusted the investment progress of several projects to suit market growth demand, ensure efficiency of capital but still ensurespending investment according to the sector development plan under Decision 236/QD-TTg of the Prime Minister. The ACV has prepared a translation plan that will last until the end of 2020.

According to Vu The Phiet, General Director of ACV, in the profit plan for2020, financial revenue accounts for 1,955 billion VND, interest from banks contributes significantly to corporate profit as Q1 contributes a third of profit. Meanwhile, the profit of core activities this year is only trying to reach 50-52 billion VND.

According to Vu The Phiet, in the 2020 plan set in May, international flights are expected to open in August and September. However, this was not feasible as countries began to appear the second wave of Covid-19, out of the forecast of ACV. According to calculations the opening to international tourists may be until the end of the third quarter and will greatly affect business plans, since international revenue now accounts for more than 60% of ACV's revenue. Although the Government is determined to revive the domestic market, total domestic revenue in June is only about 480 billion VND while the cost is about 600 billion VND, causing a loss of hundreds of billion VND from core business activities. There has been domestic market recovery and high number of passengers, but the absence of international market will greatly affect revenue and production and business plan of ACV. Therefore, in 2020, ACV will try not to lose money, but this is a huge challenge.

ACV expects total passenger traffic through 21 airports this year to fall 41% year-on-year to 69.2 million. Cargo also dropped 13% to 1.34 million tonnes, take-offs dropped 29% because of Covid-19. The absence of international visitors combined with concerns about the Covid-19 pandemic in Vietnam will have a significant impact on the company's business activities.

ACV's 2020 business plan also shows the difficulties of the aviation industry in the coming time. ACV sets a target of total revenue of 11,317 billion VND, down 45% and a pre-tax profit of 2,007 billion VND, a decrease of 80% compared to the year 2019. Although in the first quarter, ACV recorded profit before tax of 1,927 billion VND, but the pre-tax profit plan for the whole of 2020 is only 2,007 billionVND.

To overcome difficulties, ACV has shifted towards increasing the amount of cash. By the end of June, ACV had total assets of nearly 58,870 billion VND, slightly higher than the beginning of the year. The amount of bank deposits with term of less than 12 months is about 56% with more than 33,300 billion VND (up by nearly 2,450 billion VND compared to the beginning of the year).

In addition, although ACV's operating lines are different from others in terms of regular fixed costs (because airports have to open even only one passenger), in the past, ACV has cut this cost by 3%. ACV will continue to use every option to cut costs including restructuring personnel and improving management capacity.