Vietnam Airlines (VN, Hanoi Noi Bai International) took one step back from the brink of bankruptcy on July 3 when it signed a contract with Southeast Asia Commercial Joint Stock Bank, a local commercial bank more widely known as SeABank, to receive a zero-interest loan of VND2 trillion dong (USD87 million).

The sum, part of which will be disbursed early this month, is half of a VND4 trillion (USD174 million) loan the government has approved, and which three banks signed up to disburse, as support for the struggling majority state-owned flag carrier.

Vietnam Maritime Commercial Joint Stock Bank (MSB) and Saigon-Hanoi Commercial Joint Stock Bank (SHB) have agreed to stump up the other half of the state-guaranteed loan.

The loan via the three banks is in turn part of a VND12 trillion (USD522 million) rescue plan for the airline, which is reportedly VND20 trillion (USD870 million) in debt. The other component of the bailout is the sale of VND8 trillion (USD348 million) worth of shares to existing shareholders in an issue planned for the last quarter of 2021.

In addition, the government has pledged to guarantee 10-year bonds worth up to VND10 trillion (USD434 million) to finance a fleet renewal project between 2021 and 2025, local media reported.

SeABank and conglomerate affiliate BRG Group also signed with Vietnam Airlines on July 3 a “strategic cooperation agreement to develop together in many fields” and services that BRG is engaged in, including hotels and resorts, golf courses, retail, and finance.