Qazaq Air reports losses once again amidst acquisition by Vietnamese investors

In 2023, Qazaq Air reported $16.4 million in losses, which is a 15% increase year-on-year. As a result, the company’s accumulated loss increased from $79.3 million to $95.98 million over the year, according to Qazaq Air’s financial statement for 2023. 

The company’s corporate earnings decreased by 4%, reaching $42.9 million, down from the $44.7 million QazaqAir earned previously. This decline was mainly due to the forced reduction of international flights, a result of restrictions imposed by foreign authorities.

A 3% increase in domestic flights (from 8,800 to 8,500) wasn’t enough to offset the profit margins of 2022. Most of the company’s revenue – $33.96 million out of $42.9 million – came from domestic air travel, while international flights contributed only $8.76 million in revenue.

The prime cost of services reached $46.45 million, which, along with administrative expenses and sales costs, led to an operating loss of $6.35 million. Qazaq Air’s losses also included discount amortization and loan interest of $11.17 million. 

The company’s assets shrank by 8% to $68.37 million, while its liabilities increased by 13% to $89.4 million. As a result, Qazaq Air’s liabilities exceeded its assets by $19.7 million, causing its negative capital of the same amount. Notably, more than 90% of all the airline liabilities are loans from Samruk-Kazyna, which were used for fleet maintenance and the acquisition of new aircraft.

In late May 2024, President Kassym-Jomart Tokayev announced the sale of Qazaq Air from Samruk-Kazyna to Sovico Group from Vietnam. In July, it was revealed that investors would acquire the asset for $4.2 million. The deal is expected to be closed by late September. As part of the agreement, Sovico Group will repay all of Qazaq Air’s debts and purchase 20 aircraft. (The airline currently has five turbo-propeller planes. 

Samruk-Kazyna had previously attempted to sell the airline on several occasions. The bid for the purchase of Qazaq Air was initially announced in August 2023. Although Samruk-Kazyna reported some interest from several individuals in early October, the application deadlines were repeatedly extended. Ultimately, the bid was dismissed in November due to a lack of eligible applications. The bidding was declared unsuccessful for the second time in January 2024.

In November 2023, Minister of Transportation of Kazakhstan Marat Karabayev, announced that the Vietnamese Sovico Group was interested in acquiring Qazaq Air and the Aktobe Airport. At the time, the minister estimated the airline at $21.9 million. 

Sovico Group controls the Vietnamese air carrier VietJet Air. According to the company’s website, VietJet Air has gained the largest share of the domestic market over the past five years of operation and is also constantly expanding its global network. In addition, Sovico Group invests in banking, real estate, energy projects and the hotel business.