Vietnam flag carrier at risk of insolvency if govt-backed loan is not extended

HANOI (Reuters) - National carrier Vietnam Airlines JSC is facing the risk of losing liquidity as early as July if the refinancing loan repayment deadline for its government-backed loan is not extended, the government said on Tuesday.

The airline, which received 4 trillion dong ($157 million) in low-cost loans from commercial banks that were refinanced at a zero interest rate by the central bank in 2021, is grappling with financial difficulties due to the impact of the pandemic, the government said in a statement.

It has not completed refinancing efforts, such as restructuring non-core investments and sales of new shares due to regulatory approvals, the statement added.

According to the government, Vietnam Airlines may face significant risks, lawsuits and reputational damage in case the loan repayment was not extended.

"It is just one of the solutions to help Vietnam Airlines overcome difficulties, but is the most feasible and appropriate solution at the moment," the government said.

The government recommended the lawmakers allow loan repayment extensions through Dec. 31, 2027 to give the airline time to complete its restructuring, the statement said.

($1 = 25,455.0000 dong)

(Reporting by Phuong Nguyen, Editing by Louise Heavens)