More than 90% of Thai Airways creditors have approved a restructuring plan for the troubled carrier, according to a filing posted on the Stock Exchange of Thailand on 19 May.
The airline has experienced financial difficulties for several years, having posted losses annually from 2017 onwards. The impact of travel restrictions as a result of the global pandemic has crippled its finances, however. Losses between 2017 and 2019 went from 2.11 billion baht ($67.2 million) up to 12 million baht, and the carrier recorded a loss of 141 billion baht in 2020 as a government-mandated travel ban led it to almost cease its services completely.
While the Thai government has propped up seven low-cost domestic carriers with loans valued at a total of 24 billion baht, it has so far refused to step in with additional support for Thai Airways, the country’s flag carrier, despite the state’s 49% equity holding. The government refused Thai Airways initial request for a 54 billion baht loan at the start of the pandemic.
Trying to fill up the sea
Concerns over aircraft purchasing decisions and corruption at Thai Airways led Pantip Spripim, director general of the State Enterprise Policy Office that controls the government’s stake in the airline, to comment in May 2021 that any additional state funding for the airline would be like, “trying to fill up the sea”.
In March, Thai airways proposed a three-year freeze on loan payments and a six-year moratorium on its bond repayments. These proposals were given the green light by the airline’s creditors on 19 May. On 28 May, Thailand’s Central Bankruptcy Court will consider the airline’s restructuring plan.
The airline also plans to slash its workforce by 50% and is looking to raise an additional 50 billion baht in capital. Thai Airways is also challenging $7.4 billion in claims from aircraft lessors, and engine service provider Rolls-Royce. The carrier's position is that it is not liable for these debts as they are future expenses that were incurred after Thai Airways was under bankruptcy protection.
Despite a recent rally, Thai Airways shares were suspended by the Stock Exchange of Thailand on Tuesday. Thailand is currently experiencing a wave of COVID-19 cases and on 18 May, its cabinet approved an additional 700 billion baht of public borrowing to support the country’s battered economy, making prospects of state support for Thai Airways even more remote.