On the edge of bankruptcy due to the Covid-19 pandemic, debt-ridden Vietnam Airlines expects to get 4 trillion dong (US$173.6 million) in no-interest loans from three local banks.

The Southeast Asia Commercial Joint Stock Bank (SeABank), Vietnam Maritime Commercial Joint Stock Bank (MSB), and Saigon-Hanoi Commercial Joint Stock Bank (SHB) have agreed to provide the rescue package to the national flag carrier.

The banks and Vietnam Airlines are completing procedures, and hope the loans will be disbursed by late June or early July, says Nguyen Tuan Anh, director of the credit department for economic sectors at the State Bank of Vietnam.

Reeling from the impact of the pandemic last year, the carrier asked for 12 trillion dong (US$520 million) in support packages from the Vietnamese government, including 4 trillion dong in refinancing loans. Last November, the National Assembly, the country’s lawmaking body, passed a resolution authorizing the central bank to refinance and offer loan extensions of no more than two times to banks that would lend Vietnam Airlines additional capital for it to continue its operations.

In March, then Prime Minister Nguyen Xuan Phuc authorized the State Bank to grant refinancing loans totalling 4 trillion dong to commercial banks that would lend the carrier.

Vietnam Airlines has been allowed to hold its annual general meeting of shareholders after June 30 2021, which is the deadline under normal circumstances. According to sources close to the situation, the carrier is likely to reveal at the general meeting its plans to add 8 trillion dong (double the agreed rescue package) to its capital. The combined sum of 12 trillion dong was the amount the carrier had asked for last year.

Like the national carrier, Vietnamese private airlines VietJet and Bamboo Airways are also facing difficulties as their financial resources are running out while the pandemic is likely to be prolonged globally. However, the government has to begin with financing solutions for the flag carrier.