Depending on how you spin it, Thai Airways International either posted a net operating loss of US$658 million or a net profit of US$1.56 billion for the nine months to September 30. The loss seems relatively clear-cut, but Thai technically posted a net profit if you factor in one-off gains (or savings) from the ongoing rehabilitation process.

Meanwhile, the auditors declined to express an opinion on the financial statements. Welcome to the wild and wonderful world of restructuring Thai Airways.

One-off cost savings give Thai's bottom line a short term boost

On Monday, Thai Airways posted its financial reports for the nine months to September 30. It was a messy nine months for the embattled airline. Revenue for the nine months was US$457.8 million, down 66% on the comparable nine-month period in 2020.

Operating expenses for the nine months to September 30 totaled US$1.11 billion, down 53.3% on the same period last year. But owing to the airline's court-approved rehabilitation plan, a series of one-off gains added US$2.2 billion to the balance sheet and pushed Thai Airways into the black.

Notably, Thai Airways recorded a windfall of US$1.85 billion from "debt restructuring." This more than offset a one-off cost of US$563 million for loss on aircraft, right-of-use assets

and aircraft spare parts and a US$342 million one-off foreign currency exchange loss.

Despite talk of selling aircraft, Thai Airways had the same (103) number of planes on September 30 as it did on the same date in 2020. Those aircraft flew 33,162 hours in the nine months to September 30 compared to 103,189 hours in the comparable 2020 period.

Thai Airways reports they have three Airbus A340-500,  six Airbus A340-600, one Airbus A300-600, and three Boeing B737-400 aircraft for sale.

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Despite talk of selling/returning planes, Thai hasn't downsized its fleet in the past 12 months. Photo: Airbus

Auditors decline to express a conclusion on Thai's financial statements

Passenger numbers were down 83.8% (820,000) in the year to September 30. Average passenger loads were 13.9%, and there were 6,469 million available seat kilometers, down 70.7% compared to the equivalent 2020 period.

Thai's auditors, Deloitte Touche Tohmatsu Jaiyos, declined to express a conclusion on the financial statements. They said this was due to three reasons: a lack of liquidity and default of debt payment, the effect of coronavirus on the operations of the Group, and Thai entering into the rehabilitation process.

After entering into bankruptcy protection in May 2020, Thai has defaulted on many liabilities due, including trade accounts payable, short-term borrowings, debentures, and lease liabilities. Later on Monday, Thai Airways confirmed a temporary trading suspension pending further clarification following the auditor's decision.

The Thai Government sold down its majority stake in Thai Airways last year, smoothing the way for the airline to enter the rehabilitation process.

Thai Airways says the auditor's decision isn't due to queries about the accuracy of the financial statements. Instead, owing to the three reasons stated, Deloitte Touche Tohmatsu Jaiyos aren't confident Thai Airways is a going concern.

While now operating some limited flights, for much of 2021, Thai Airways and its low-cost subsidiary ThaiSmile operated very few flights, having clear implications one the bottom line. But the recent Phuket Sandbox is giving the airline group some uplift, albeit weak.

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Thai is cautiously optimistic going forward and resuming some routes. Photo: Getty Images

Thai Airways is determined to stay the course

Since then, other parts of Thailand, including Bangkok, have cautiously reopened to international travel. Thai Airways is cautiously optimistic, resuming flights on 36 international routes covering Asia, Europe, and Australia this quarter.

Despite the auditors' reservations, the airline says they remain determined to chart a course through the business rehabilitation plan and emerge a viable ongoing proposition. But 18 months into the rehabilitation process, progress remains painfully slow, and one-ff cost savings boosting the bottom line remain a short-term financial band-aid.