Summary
- Vietnam Airlines shares have risen massively throughout 2024, rallying as much as 182.45% during the year.
- However, its market capitalization remains relatively low, around $3 billion.
- The airline and its executives have remained cautious about 2024.
Vietnam Airlines has become one of the best-performing airline stocks this year, with the airline’s turnaround resulting in a massive rally year-to-date (YTD). Yet the stock’s low baseline has meant that Vietnam Airlines still has a relatively low market capitalization, especially when compared to its global peers.
Rallying based on a turnaround
YTD, Vietnam Airlines shares have risen by as much as 182.45%, according to data from Yahoo Finance. On January 2, the carrier’s stock closed the day of trading at VND12,500 ($0.48), while on July 11, the airline’s shares opened at VND34,200 ($1.35), rising to VND34,650 ($1.36) at the time of writing. As a result, the current market capitalization of the airline was VND77.4 trillion ($3 billion) on July 11.
In comparison, Delta Air Lines’ $30.2 billion market capitalization meant that it was ranked number one among airlines worldwide, with Ryanair ($26.9 billion) and InterGlobe Aviation ($19.9 billion), the parent company of IndiGo, coming in second and third, respectively, per a market capitalization ranking.
Photo: Vytautas Kielaitis | Shutterstock
Vietnam Airlines’ current market capitalization would rank it 31st, with the Vietnamese carrier being behind the United States-based regional airline SkyWest Airlines ($3.3 billion) and just in front of Hungary-based Wizz Air, which has a market capitalization of $2.8 billion at the time of writing.
Meanwhile, the Arca Global Airline Index (AXGAL), trading on the New York Stock Exchange (NYSE), has declined as much as 17.86% YTD. On January 2, the index closed at $66.01, while on July 10, AXGAL ended the day of trading at $55.62.
According to the NYSE, AXGAL was a modified equal-dollar weighted index measuring the performance of highly capitalized and liquid international airline companies, tracking the share price performance of select local market companies or American Depositary Receipts (ADR) of major US-based carriers or international airlines.
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Returning to profitability
However, Vietnam Airlines has not been profitable since Q4 2019, when the carrier ended the period with a profit after tax of VND103.7 billion ($4 million), while its year-end profit after tax was VND2.4 trillion ($94.3 million), with the yearly profit increasing by 14.6% year-on-year (YoY).
Since then, with the onset of the pandemic, the airline and Vietnam’s tourism industry, in general, had suffered due to international travel restrictions. Still, the airline began recovering, and in Q1 2024, it earned a profit of VND4.4 trillion ($173 million), compared to a net loss of VND37.3 billion ($1.4 million) in Q1 2023.
Photo: Thanhliemnguyen | Shutterstock
According to the Vietnam National Authority of Tourism (Cục Du lịch Quốc gia Việt Nam, VNAT), 12.6 million international tourists, 3.5 times more than in 2022. Meanwhile, VNAT detailed that as of June, over 8.8 million international visitors came to the country, a 58.4% YoY increase.
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Reducing losses in 2024
Despite the turnaround and improving financial performance, Vietnam Airlines and its executives have remained cautious, with the airline noting that it has reduced its full-year losses by 49.8% in 2023. The carrier ended the period with a net loss of VND5.6 trillion ($220.2 million).
Photo: Thanhliemnguyen | Shutterstock
In a statement in late June, Dang Ngoc Hoa, the chairman of Vietnam Airlines, remarked that the aviation industry has continued to face challenges, and based on these economic forecasts, Vietnam Airlines will focus on restructuring assets, capital, and other areas. Thus, its primary goal was to reduce losses and balance revenues and costs in 2024.
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