Vietnam Airlines (VN) has downgraded its profit forecast for the year as it deals with more competition.
The airline has asked the Ministry of Transport to adjust its business targets due to business difficulties during the first seven months of the year, Vietnam News Agency has reported.
“The airline blames fierce competition from newcomer low-cost carrier VietJet Air as one of the reasons for the missed targets due to a loss of market share, especially for the two major routes from Hanoi to HCM City [HCM City] and from HCM City to Da Nang,” VNA reported.
VN was not immediately available to comment.
VN forecasts profits of nearly VND69 billion ($3.3 million) after tax for the year, VND300 billion ($14 million), or about 20 percent of what was expected.
Total revenue is estimated to be VND52 trillion, down by around VND2.4 trillion ($114 million), or 4.6 percent of the target.
The carrier earned about VND13 billion ($0.6 million) in profit over the first five months. The first five-month revenue is VND21 trillion ($1 billion), or about 39 percent of the year target, chair Pham Viet Thanh said according to VNA.
Some 78 percent of tickets were sold during the first five months, 3 percent lower than expected. In July, revenue from the domestic market decreased by 2.5 percent compared to the same period last year and is far short of the target.
VN and low-cost carrier Jetstar Pacific are planning to merge in February, which is expected to cost VN up to $6 million.