Crash landing: Thai Airways will file for bankruptcy

Thailand’s national carrier Thai Airways will file for bankruptcy to give the ailing airline time to work out a rehabilitation plan, the government decided on May 19.

According to Thailand’s Prime Minister Prayut Chan-ocha, it was “the best course” to help the airline back onto its feet. Under the rehabilitation plan, Thai Airways would not receive financial assistance from the government.

The government decided against the two other options, which were providing another cash injection from tax money for the airline and to let it go bankrupt on its own.

However, no details were available of the plan, including how the carrier would find working capital to pay staff and plane maintenance. Thai Airways posted losses of 12 billion baht ($374.3 million) in 2019 and has reportedly amassed a debt burden of almost 300 billion baht ($9.4 billion) which is set to outpace its assets in 2020.

Government expected to reduce stake to below 50 per cent

The airline initially sought a 54 billion-baht ($1.8 billion) bailout loan from the government. There is speculation that its reorganisation under bankruptcy law could take the government’s ownership share below 50 per cent from the current 51 per cent, resulting in some form of privatisation. The rehabilitation process is also likely to lead to cuts in staff, fleet and flights.

In a statement, the airline said it “will not be dissolved or go into liquidation or be declared bankrupt,” though its union said some 5,000 staff out of its 20,000-strong team is expected to be let go.

The airline stopped all its flights at the beginning of April as Thailand imposed strict precautions to curb the spread of the coronavirus. Almost all its staff was put on leave at greatly reduced salaries. The government last week extended to the end of June a ban on arrivals on international passenger flights, ruling out their immediate resumption.

Thai Airways’ share price jumped almost 15 per cent on the news on May 19, but is still hovering around historic lows of around a meager four baht as compared to better days when the share price stood at 55 baht in April 2010.



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Thailand’s national carrier Thai Airways will file for bankruptcy to give the ailing airline time to work out a rehabilitation plan, the government decided on May 19. According to Thailand’s Prime Minister Prayut Chan-ocha, it was “the best course” to help the airline back onto its feet. Under the rehabilitation plan, Thai Airways would not receive financial assistance from the government. The government decided against the two other options, which were providing another cash injection from tax money for the airline and to let it go bankrupt on its own. However, no details were available of the plan, including how...

Thailand’s national carrier Thai Airways will file for bankruptcy to give the ailing airline time to work out a rehabilitation plan, the government decided on May 19.

According to Thailand’s Prime Minister Prayut Chan-ocha, it was “the best course” to help the airline back onto its feet. Under the rehabilitation plan, Thai Airways would not receive financial assistance from the government.

The government decided against the two other options, which were providing another cash injection from tax money for the airline and to let it go bankrupt on its own.

However, no details were available of the plan, including how the carrier would find working capital to pay staff and plane maintenance. Thai Airways posted losses of 12 billion baht ($374.3 million) in 2019 and has reportedly amassed a debt burden of almost 300 billion baht ($9.4 billion) which is set to outpace its assets in 2020.

Government expected to reduce stake to below 50 per cent

The airline initially sought a 54 billion-baht ($1.8 billion) bailout loan from the government. There is speculation that its reorganisation under bankruptcy law could take the government’s ownership share below 50 per cent from the current 51 per cent, resulting in some form of privatisation. The rehabilitation process is also likely to lead to cuts in staff, fleet and flights.

In a statement, the airline said it “will not be dissolved or go into liquidation or be declared bankrupt,” though its union said some 5,000 staff out of its 20,000-strong team is expected to be let go.

The airline stopped all its flights at the beginning of April as Thailand imposed strict precautions to curb the spread of the coronavirus. Almost all its staff was put on leave at greatly reduced salaries. The government last week extended to the end of June a ban on arrivals on international passenger flights, ruling out their immediate resumption.

Thai Airways’ share price jumped almost 15 per cent on the news on May 19, but is still hovering around historic lows of around a meager four baht as compared to better days when the share price stood at 55 baht in April 2010.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

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Donation Total: $10.00

 

 

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