Amid formulating rehabilitation plans for the airline, Thai Airways has announced that there will be no employee layoffs for the time being. Although the carrier is struggling to keep afloat financially, the management insists that all jobs will be retained for at least a year.
At this point, the airline is waiting on a clear rehabilitation plan by the Central Bankruptcy Court. According to Bangkok Post, acting president of Thai Airways, Mr Chakkrit Parapuntakul explains the court will take three to five months to vet the plan. In the meantime, the airline is abiding by a six-point strategy to keep afloat.
Parapuntakul also announced in a meeting on Thursday that employees would not be affected short term. He explained,
“There will be no layoffs, for the time being, as we have to wait for a clear reorganization plan. Once it is ready, we’ll know how many jobs will be retained. Then we will come up with plans and remedies. It will take at least a year before we reach that point."
What happens to employees next year?
Thai Airways is waiting on plans from the court before deciding on its’ employees fate.
The best-case scenario is if the restructuring plans set a clear direction for THAI, allowing for profitable expansion into different areas. Henceforth, the layoffs could be avoided with a workers rotation implemented to serve these new units.
Additionally, the Thai News Agency (TNA) reported that employees might be required to have their salaries slashed voluntarily. The reason being the airline needed to maintain its cash flow. According to Parapuntukal, the airline no longer has liquidity issues, but “cash flow remains a challenge”.
Simple Flying did previously report that talks were underway for THAI to let go one-third of its employees. Should the plans be unsuccessful, 6,000 employees may be laid off next year.
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Six-point strategy
In hopes of getting back on track, THAI has implemented a six-pronged strategy. The strategy focuses on reducing costs, downsizing strategically, and making smart investments. If followed successfully, the strategy can aid THAI in bouncing back stronger within five years.
Specifically, the six-point strategy is as follows:
- Reorganizing the company to complement the size of the business
- Downsizing fleet
- Decreasing the route network
- Investing more in cargo and catering services
- Updating employee welfare benefits and slashing costs
- A revamp of ticket sales
The reform plan by Thai Airways still allows the carrier to continue business as usual. “Business as usual”, however, certainly looks different in a coronavirus world.
Currently, Parapuntakul believes international flights will resume next month provided destination countries adopt essential disease control measures. According to TNA, THAI will utilize flat fare rates for flight tickets.
Struggling for survival
Thai Airways has been suffering even before the coronavirus outbreak. Apart from 2016, the national carrier was reporting losses since 2012. To date, THAI has raked up a total of $7.8bn in debt. However, it seems the 60-year-old airline is adamant on not giving up.
After receiving a $1.8bn government loan in April, the airline started to get back on its feet.
Last month, the government took it one step further and reduced its stake in the airline. This now leaves THAI privatized, and able to access more provisions and protections under the bankruptcy law.
Do you think THAI’s six-point strategy will be successful? Will its employees lose their jobs? Let us know in the comments.