Thai AirAsia Turns To Crowdfunding To Raise Cash

Thai AirAsia has launched a crowdfunding campaign to help shore up its short-term stability. It follows a tough year and a half for the airline, which only recently resumed flying after a two-month suspension.

Thai AirAsia is looking to raise US$2.4 million via a crowdfunding campaign. Photo: AirAsia

A short term cash fillup for Thai AirAsia

Thai AirAsia’s lean into this unconventional field of finance isn’t quite as loose as your typical crowdfunding campaign. It is approved and regulated by the Securities and Exchange Commission (SEC).

Crowdfunding might be a snappier turn of phrase than a debenture, but underneath the marketing, this is a subscription bond with a six-month maturity that is paying 6.75% p.a. The minimum investment is approximately US$1,528 (TH฿50,000), and the Thai AirAsia aims to raise about US$2.4 million (TH฿80,000,000).

Battling a deadly COVID-19 wave, Thai AirAsia suspended its domestic flying in early July. Initially, this was for two weeks, but the suspension blew out to two months. However, the Bangkok-based low-cost carrier had been under pressure for some time owing to low passenger volumes and subsequent low revenues.

Thai AirAsia flies a fleet of mostly Airbus A320 aircraft. Photo: AirAsia

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Salaries not paid as Thai AirAsia faces financial pressures

In early August, the airline took the radical step of not paying or part-paying salaries to save cash. July salaries for executive-level employees were deferred until September. For frontline Thai AirAsia employees, half their salaries due were paid, with the rest deferred until September. Over August, all employees went onto unpaid leave.

“Despite our best efforts at mitigating these short-term effects, the situation has taken a turn for the worse and became more severe than we initially expected,” Thai AirAsia said in a statement at the time. “We expect the situation will improve by September. Salary payments to all employees shall be regularised once the funds become available and our operations reinstated.”

While that sorry state of affairs might not fill potential Thai AirAsia investors with confidence, the airline has resumed flying. On September 3, Thai AirAsia tentatively resumed flights between Bangkok and Chiang Mai, Phuket, Hat Yai, Nakhon Si Thammarat, Chiang Rai, Khon Kaen, Udon Thani, Ubon Ratchathani, Nakhon Panom, Roi Et, and Narathiwat.

“We have seen a very positive response within the first three days of returning to service, especially for popular destinations,” said Thai AirAsia CEO Santisuk Klongchaiya earlier this month. “These are very encouraging signs for the aviation business and tourism industry, which we expect to begin recovering very soon.”

Thai AirAsia CEO Santisuk Klongchaiya. Photo: AirAsia

Thai AirAsia confident of strong response to the crowdfunding campaign

On the back of this good news, Thai AirAsia is launching its crowdfunding campaign. Mr Klongchaiya says the airline is widely supported in Thailand, and he expects a strong response. Describing the last few months as a “difficult situation,” the Thai AirAsia CEO said;

“This crowdfunding campaign will be another avenue for people to show their support. We are touched by the positive response that we have received so far that shows how much support and confidence the public has in AirAsia, which is just as important to us overcoming this crisis.” 

Aside from this, Thai AirAsia is shoring up its finances through more traditional sources. A joint venture between Malaysia-based AirAsia and Bangkok-based Asia Aviation Public Company Ltd, Thai AirAsia doesn’t have an easy road ahead of it. But a handy US$2.4 million from crowdfunding may help the airline along the way, at least until tourism recovers in Thailand.