We recently reported on Columbia’s Avianca filing for bankruptcy protection in New York Court. With the coronavirus pandemic rattling the aviation industry hard, we had also predicted that many more airlines will head the same way, if they do not receive any substantial government backed financial aid. In a latest report, it is known that the Thailand Government has confirmed that its flag bearer, Thai Airways, will begin restructuring proceedings in a bankruptcy court.
The State-Enterprise Planning Office has agreed in principle for the rehabilitation of Thai International Airways in court. This procedure replaces a previously thought rescue plan, which involved the airline seeking a 58.1bn baht loan guaranteed by the government. This would be similar to filing of Chapter 11 Bankruptcy filing in the United States, which Avianca did last week.
Thai International Airways was suffering financially even before the advent of COVID-19 pandemic. With the ongoing aviation lock down has simply worsened the situation for the carrier as travel and tourism in the country have been brought to a near standstill. Thai Airways had initially sought a 58.1bn baht ($1.7 billion) bailout loan from the Thai government. It is speculated that the carrier’s reorganization under bankruptcy act would lead to decrease in government ownership share – almost below fifty percent – thereby, effecting a form of privatization for the carrier. All planned rescue options were most likely to lead in cuts in fleet, flights and staff.
Thai Airways had bore losses of 12bn baht ($374.3 million) last year, and about the same in 2018 as well, with almost 2.11bn baht ($65.8 million) loss in 2017. Government reports state that the airline is carrying a staggering total debt of almost 300bn baht ($9.4 billion).
The carrier has stopped all operations since April 2020, when Thailand imposed strict restrictions to curb the spread of virus. Most of Thai’s staff was put on unpaid leave, and those on duty are paid substantially reduced salaries. The government, just last week, has extended the travel ban to June, thereby, ruling out immediate resumption of international flights.
National flag bearers including South African Airways, Air India, American Airlines, Cathay Pacific, among others have particularly suffered the most during these afflicting times. This is indeed surprising given that other private carriers based in Thailand – Thai Air Asia, Lion Air, Thai Vietjet have not yet raised a red flag, thanks to the deep pockets and financial backing of numerous private stakeholders.
We are following this news closely, and shall provide an update as soon as we get any more data. We sincerely hope that Thai emerges from this bankruptcy protection as a stronger airline, capable to carry out sustainable operations. What do you think about Thai’s situation? And most importantly, do you think Thai will stay afloat?