Two airlines fail to pay fuel bills

The Viet Nam Air Petrol Co (Vinapco) announced this week that it was facing insolvency after two air carriers had fallen in arrears on payments for fuel to the tune of VND210 billion (US$10.24 million) – a figure equipvalent to half of Vinapco’s charter capital.

Jetstar Pacific owed the jet fuel supplier VND173 billion ($8.43 million) while Indochina Airlines owed another VND27 billion ($1.32 million), said Vinapco general director Tran Huu Phuc.

Vietnam Airlines, the national flag carrier and the leading State shareholder in Vinapco, has asked the Ministry of Finance and Deputy Prime Minister Hoang Trung Hai to resolve the situation, Phuc told Viet Nam News yesterday, adding “it is in process and I expect solutions will be drafted soon”.

Vinapco was relying solely on the reputation of Vietnam Airlines in order to secure financing to import additional fuel, Phuc said.

“Now, they make on-the-spot payment for jet-fuel costs every day, but the prior debts are still unpaid.”

Indochina Airlines had already defaulted on its debut, but Jetstar Pacific had committed to paying principal and interest as of July 31, Vinapco said. However, Vinapco was also requiring underwriting documents from Jetstar.

The Viet Nam Competition Authority has said that the debt should be resolved based on payment terms in the contract between Vinapco and Jetstar. If conciliation failed, the case could go to court. An official from the authority said on condition of anonymity that the agency had received details from Vinapco relating to the debt collection.

However, court-related legal proceedings were time-consuming and costly and fuel stoppage would cause numerous problems to the carriers, Phuc said.

Indochina Airlines, Viet Nam’s first private airline, founded by musician Ha Dung, began operations in November 2008 but has been grounded for the last two years due to financial difficulties, defaulting on debts totalling VND70 billion ($3.41 million). — VNS

Tags: Vietnam aviation, Vietnam aviation industry, Vietnam aviation market