On Monday, a senior official for Thai Airways International (THAI) said that the government of Thailand intends to go to the bankruptcy court to submit a rehabilitation plan for its national airline. The government, which owns 51% of THAI, is thus opting out of a previously drafted rescue plan for the carrier.
Similar to US Chapter 11
As told to Reuters on Monday, Thailand plans to take a rehabilitation plan for Thai Airways to the bankruptcy court. A key government panel has backed the undisclosed plan. It is now due for consideration by the Thai Cabinet on Tuesday.
“The State-Enterprise Planning Office agreed in principle for the rehabilitation of Thai Airways in court… the procedure will be submitted to cabinet tomorrow,” government spokeswoman Narumon Pinyosinwat told the media outlet. “It is similar to filing Chapter 11 in the United States,” she said, adding that details of the rehabilitation plan have not been discussed.
Rather than heading to the bank for a much-hoped-for bailout payment of $2.2 billion, it seems the carrier will now face restructuring, just in time for its 60th birthday this month.
“Time has run out, Thai Airways must change,” Thailand’s Finance Minister Uttama Savanayana said in a statement last week to the Bangkok Post. “Conventional practices cannot continue. There must be a massive overhaul.”
Already struggling before COVID-19 shut down commercial aviation as we know it, THAI’s losses over the past three years have amounted to $778 million. According to the Bangkok Post, its debt amounts to $2.88 billion, of which approximately 78% is owed to bond investors. One of the latest options for a plan specifically involved debt rehabilitation, where lenders would provide $300,000 or more.
Surely, it will also include a reduction in the size of THAI’s mixed Boeing and Airbus 75 aircraft fleet. Most likely, this will include the early retirement of its aging 747s. The eight THAI jumbo jets have an average age of 21.7 years, and the airline was planning for their departure by 2024.
A small grace perhaps, but the airline has no new aircraft on order, so there has been no need for talks on deferral of deliveries from manufacturers.
Shares at an all-time low
Shares in the carrier slid as much as 13% on Monday to the lowest level in over a month. Thai Airways International stock has tumbled more than 90% from its highest point in 1999.
The national airline and Star Alliance member has suspended all flights until at least the 31st of May and had. In April, it sought a bailout package of $2.2 billion to keep it afloat through the crisis. Eight of its compatriot airlines meanwhile have banded together and asked for $770 million in aid.
What do you think of the future of Thai Airways? What will the rehabilitation plan look like? Let us know your thoughts in the comments.