Thai Airways files for bankruptcy amid pandemic
Thailand plans to go to bankruptcy court to submit a rehabilitation plan for its national carrier, Thai Airways International, rather than go ahead with a previously planned rescue.
A government spokeswoman, Narumon Pinyosinwat, confirmed the bankruptcy filing, saying, “The State-Enterprise Planning Office agreed in principle for the rehabilitation of Thai Airways in court…the procedure will be submitted to Cabinet tomorrow.”
The procedure replaces a previous rescue plan, which involves the airline seeking a 58.1 billion baht (S$2.6 billion) loan guaranteed by the government. “It is similar to filing Chapter 11 in the United States,” she said, adding that details of the rehabilitation plan have not been discussed.
Thai Airways, like every other carrier in the world, has suffered because of the COVID-19 pandemic and the virtual halt to air traffic.
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Deputy Prime Minister, Anutin Charnvirakul, said that several internal rehab plans have been conducted, but with no success. One new option involves debt rehabilitation, with each of the lenders providing $300,000 or more. The proposed plan will have to be decided by THAI’s shareholders.
The State Enterprise Policy Office is expected to consider the rehabilitation plan on Monday (today).
THAI, which turns 60 years old this month, recorded a net loss of $66m in 2017, according to filings with the Stock Exchange of Thailand. The losses spiraled to $361m in 2018 and $374m last year.
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Thai PBS World reports today that THAI has debts of more than $7.6bn, of which $677m should be repaid this year. However, the airline’s cash flow is just $674m.
The restructuring of THAI under the government rehabilitation plan will involve cutting down the size of its fleet. Spending cuts will also mean job losses as the carrier strives to survive.
While there is a glimmer of hope on the horizon for THAI, it looks like its future will be decided one way or the other next week.
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