Bankrupt Thai Airways seeks to avoid seizure of planes by foreign creditors
Thailand’s national airline Thai Airways, which filed for bankruptcy in May, fears that international creditors would impound its planes when it lands at foreign airports over unpaid leasing bills and has turned to the Thai government for help.
According to Prapas Kong-Ied, director-general of the State Enterprise Policy Office, which oversees the airline’s planned “rehabilitation” during the bankruptcy, said that the Thai ministry of foreign affairs will “notify the authorities” in countries where Thai Airlines provides services about the airline’s recovery plans. This would prevent Thai Airlines’ aircraft from being impounded by overseas creditors, he insisted, without providing details.
The troubled airline turned to the government because it had “many contracts with trading partners and legal obligations that can only be resolved with the state’s help,” he noted, adding that, for its financial recovery, Thai Airways would needs to stay in business in order to generate revenue and pay off close to 250 billion baht ($7.94 billion) of outstanding debt to national and international creditors.
Debts over government interference in foreign commercial contracts
The announcement has been met with some disbelief by industry observers whether it would work that way.
“I doubt that foreign governments of countries with a developed and accountable legal system – which are where most of Thai Airways’ leasing contractors and other creditors are located – would interfere in commercial contracts in such a case,” a source told Investvine.
“it doesn’t work that way in other countries as it might work in Thailand where the ones in charge are used to government interference at all levels,” the source added.
Thai Airways is currently reshuffling its route plans and international landing slots before it will take to the skies again in July. Insiders say that the management is keen to avoid taking up flights to soon to countries where it is indebted with airline leasing companies and airports in order to avoid seizures.
Bankruptcy reveals financial mismanagement
Meanwhile, Thai Airways’ bankruptcy seems to have exposed a corporate culture of massive financial mismanagement and corruption, according to ASEAN official Wanchai Roujanavong, former senior consultant prosecutor in the Thai office of the attorney-general.
Writing on Facebook, Roujanavong said that the rehabilitation process is likely to reveal that Thai Airways paid prohibitively high fees for the rental of aircraft, which is said to be one of the causes of the airline’s heavy losses. He claimed that the airline’s fleet was leased through several agents for accumulating fees, allegedly with the consent of the airline’s board.
Without the proposed rehabilitation plan, the former chief prosecutor said that that the public would probably never have had the chance to know the truth, “while the parasites carried on sucking the blood out of the airline.”
Police has also opened a probe into Thai Airways into possible graft that may have been committed by Thai Airways officials.
A source at the Thai transport ministry said that in 2019, ticket sales and freight revenues totaled around 140 billion baht and there were 25.4 million passengers who flew with Thai Airways, the source said.
In details, the average fare per passenger was 6,081 baht, which was significantly lower and not consistent with the rates normally charged to customers, the source said, indicating either that a lot of passengers were flying for free or money has mysteriously disappeared.
Another source said that Thailand’s financial reporting was a “mess” even though it is a listed company and that it was in dire need of an independent forensic audit by an international auditor. Any findings of misconduct could lead to criminal charges.
Thailand’s national airline Thai Airways, which filed for bankruptcy in May, fears that international creditors would impound its planes when it lands at foreign airports over unpaid leasing bills and has turned to the Thai government for help. According to Prapas Kong-Ied, director-general of the State Enterprise Policy Office, which oversees the airline’s planned “rehabilitation” during the bankruptcy, said that the Thai ministry of foreign affairs will “notify the authorities” in countries where Thai Airlines provides services about the airline’s recovery plans. This would prevent Thai Airlines’ aircraft from being impounded by overseas creditors, he insisted, without providing details. The...
Thailand’s national airline Thai Airways, which filed for bankruptcy in May, fears that international creditors would impound its planes when it lands at foreign airports over unpaid leasing bills and has turned to the Thai government for help.
According to Prapas Kong-Ied, director-general of the State Enterprise Policy Office, which oversees the airline’s planned “rehabilitation” during the bankruptcy, said that the Thai ministry of foreign affairs will “notify the authorities” in countries where Thai Airlines provides services about the airline’s recovery plans. This would prevent Thai Airlines’ aircraft from being impounded by overseas creditors, he insisted, without providing details.
The troubled airline turned to the government because it had “many contracts with trading partners and legal obligations that can only be resolved with the state’s help,” he noted, adding that, for its financial recovery, Thai Airways would needs to stay in business in order to generate revenue and pay off close to 250 billion baht ($7.94 billion) of outstanding debt to national and international creditors.
Debts over government interference in foreign commercial contracts
The announcement has been met with some disbelief by industry observers whether it would work that way.
“I doubt that foreign governments of countries with a developed and accountable legal system – which are where most of Thai Airways’ leasing contractors and other creditors are located – would interfere in commercial contracts in such a case,” a source told Investvine.
“it doesn’t work that way in other countries as it might work in Thailand where the ones in charge are used to government interference at all levels,” the source added.
Thai Airways is currently reshuffling its route plans and international landing slots before it will take to the skies again in July. Insiders say that the management is keen to avoid taking up flights to soon to countries where it is indebted with airline leasing companies and airports in order to avoid seizures.
Bankruptcy reveals financial mismanagement
Meanwhile, Thai Airways’ bankruptcy seems to have exposed a corporate culture of massive financial mismanagement and corruption, according to ASEAN official Wanchai Roujanavong, former senior consultant prosecutor in the Thai office of the attorney-general.
Writing on Facebook, Roujanavong said that the rehabilitation process is likely to reveal that Thai Airways paid prohibitively high fees for the rental of aircraft, which is said to be one of the causes of the airline’s heavy losses. He claimed that the airline’s fleet was leased through several agents for accumulating fees, allegedly with the consent of the airline’s board.
Without the proposed rehabilitation plan, the former chief prosecutor said that that the public would probably never have had the chance to know the truth, “while the parasites carried on sucking the blood out of the airline.”
Police has also opened a probe into Thai Airways into possible graft that may have been committed by Thai Airways officials.
A source at the Thai transport ministry said that in 2019, ticket sales and freight revenues totaled around 140 billion baht and there were 25.4 million passengers who flew with Thai Airways, the source said.
In details, the average fare per passenger was 6,081 baht, which was significantly lower and not consistent with the rates normally charged to customers, the source said, indicating either that a lot of passengers were flying for free or money has mysteriously disappeared.
Another source said that Thailand’s financial reporting was a “mess” even though it is a listed company and that it was in dire need of an independent forensic audit by an international auditor. Any findings of misconduct could lead to criminal charges.
