Vietnam Airlines stated its revenue may increase by 31% year-on-year this year as it expands its route network and fleet (Thahn Nien, 10-Jun-2010). It stated sales may increase from USD1.3 billion in 2009 to USD1.7 billion this year. The carrier also expects a 28% year-on-year rise in passenger numbers to 12 million. Vietnam Airlines plans to expand its fleet to 115 aircraft by 2015 and 165 by 2020. The carrier will have 70 aircraft by year-end. CEO, Pham Ngoc Minh, stated Vietnam Airlines is also in the process of preparing its IPO and is seeking foreign partners. He also stated the carrier is ready to launch services to the US once it receives regulatory approval (Thahn Nien, 07-Jun-2010). It has applied to launch Ho Chi Minh City-Los Angeles via Osaka service.
Vietnam Airlines expects revenue increase of 31% this year
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Vietnam Airlines readies to enter US market, with Ho Chi Minh-LAX, following A350-900 HGW order
Vietnam Airlines has become the latest Southeast Asian airline to commit to new ultra-long range aircraft enabling the launch of nonstop flights to the continental US. Vietnam Airlines has acquired 10 higher gross weight A350-900s, which are capable of operating nonstop Los Angeles to Ho Chi Minh even in strong headwinds, from 2020.
Vietnam Airlines has been preparing for flights to the US for several years and now finally has committed to acquiring an aircraft capable of launching its preferred US route. Several US routes are possible but Ho Chi Minh-Los Angeles is by far biggest Vietnam-US city pair with over 100,000 annual one-way passengers.
Vietnam Airlines will join Philippine Airlines, Singapore Airlines and United Airlines – and likely Garuda Indonesia and Thai Airways – in operating nonstop flights from Southeast Asia to the continental US. New generation aircraft have opened up new opportunities to operate Southeast Asia-US fights economically but overcoming intense one-stop competition will be a challenge.
Vietnam Airlines 2017 outlook: slower growth and smaller profits as competition intensifies
Vietnam Airlines has grown rapidly and profitably over the last two years, despite intensifying from its fast-growing local rival VietJet Air. Vietnam Airlines is now only one of four airlines in Southeast Asia with more than 20 million annual passengers.
Passenger traffic has grown by more than 50% since VietJet’s launch at the end of 2011, while the flag carrier has accumulated approximately USD150 million in pre-tax profits. In 2016 Vietnam Airlines achieved 19% growth and record profitability.
However Vietnam Airlines plans to grow at a much slower rate in 2017, and intensifying competition will likely impact profitability. Opportunities for further domestic expansion are becoming more limited as the market becomes more saturated, while international expansion poses more challenges and risks.