How Vietnam carrier averted closure and became world’s best-performing airline stock

A surprise return to profit has propelled Vietnam Airlines JSC to become the world’s best performing airline stock this year, shrugging off the risk of bankruptcy as the company’s post-pandemic recovery finally picks up momentum.

The state-owned carrier has rallied 179 per cent so far in 2024, lifted by a rebound in travel demand. That steered the company to post a bumper first-quarter profit after more than four years of consecutive losses.

It’s an impressive turnaround for an airline that until recently had been at risk of insolvency, and in danger of being delisted from the Ho Chi Minh Stock Exchange. It is now outperforming regional rivals such as Singapore Airlines Ltd., which has risen 7.8 per cent this year, and Air China Ltd., down 3.7 per cent.

Vietnam Airlines is expecting to record “all-time high revenue and turnaround profit” this year, according to a July 4 note from PYN Fund Management, one of the company’s few institutional investors. It was highlighted as PYN Elite’s stock of the month for June by analyst Huyen Tran, with a forecast of growth in passengers and revenue this year.

Airlines across Southeast Asia are seeing a resurgence in demand as key tourist markets slowly return. Visitors from China, the largest source of visitors for Vietnam before the pandemic, have streamed back in the first six months of this year, more than tripling from a year earlier. As the biggest local carrier operating routes to the mainland, Vietnam Airlines is poised to benefit.

The company remains wary of challenges to its business: In a statement last month, Vietnam Airlines Chairman Dang Ngoc Hoa cited “macroeconomic uncertainties” facing the industry, adding that its “primary goal” is to reduce losses while balancing revenue