Thai Airways seeking business rehabilitation plan that has the unanimous support of it’s creditors
Thailand’s Deputy Prime Minister Wissanu Krea-ngam has oversight of a government committee monitoring the progress of the board of Thai Airways International as it seeks to achieve the support of all creditors for the firm’s survival plan. It is understood that the committee, in turn, reports to the cabinet. The firm ceased to be a state-owned enterprise just prior to its filing for bankruptcy in May last year in Bangkok.
Thai Airways will submit a final rehabilitation plan to the Central Bankruptcy Court based on unanimous approval from all creditors, the grounding of large wide-bodied aircraft such as the Boeing 747 and the reduction of its pilot’s roster from 1,300 to just over 900. The plan is expected to focus on debt restructuring for the airline by extending repayment terms and cutting costs going forward rather than seeking haircuts on amounts due.
Deputy Prime Minister Wissanu Krea-ngam has disclosed that the rehabilitation plan due to be submitted by Thai Airways to the Central Bankruptcy Court will be on time after two delays since the end of last year.
The government’s top legal affairs expert, who oversees a committee liaising with the board of Thai Airways International working on a blueprint for the survival of the airline, the country’s flag carrier since it commenced flying in March 1960, gave some insight into why the top executives working on the plan are up against such a difficult task.
Cabinet is kept briefed on the progress of efforts to save the former flag carrier with huge levels of debt
DPM Wissanu also revealed that the cabinet is being kept briefed on the ongoing work of the board even though Thai Airways ceased to be a state-owned enterprise last year with the Finance Ministry reducing the state’s shareholding in the carrier to below 50% to allow it to seek bankruptcy protection.
The company had continuously lost huge sums of money despite earlier survival plans. It had a total debt of ฿339.9 billion when it filed for the protection of the court against only ฿298.9 billion in assets
When the court approved a proposal to rehabilitate the firm last September after an extensive review lasting several days, there was an agreement that the plan to be submitted to it must have the unanimous support of all creditors.
Many of those who opposed the proposal, last year, were Thai based creditors.
Planners working on the deal face an unenviable task to obtain unanimous approval for a business plan
The challenging work faced by the team of seven planners in formulating a viable business plan that can be endorsed by all the creditors has been a difficult and tortuous process.
So much so that the firm’s management went back to the court and asked if a majority vote of creditors to endorse any plan would be sufficient as the law allows.
This was rejected by the court.
Over 300 pilots to go with no recruitment in 2021 and 2022. Deal to focus on debt extensions, not haircuts
An early indicator of what the plan might contain can be seen from reports which have emerged that Thai Airways will be reducing the number of pilots employed by what is expected to be a slimmer operation to 905 from 1,300 now meaning 395 jobs must go.
In addition, it is also understood that no pilots will be recruited by the carrier this year and in 2022.
The plan being looked at, while it may involve debt reduction or haircuts for some creditors, is thought to be more focused on an extension of debt repayment terms.
Thai Airways executives are looking for a better deal
In the meantime, executives at Thai Airways are calling on its suppliers and lessors, many of whom are also creditors, to cut their charges to the former state-owned airline to allow it to fly back into profitability.
It is also reported that the airline will dispense with its Boeing 747 fleet as well as the large Airbus 380 and Airbus A-330-300 aircraft as the firm adapts to what will be an altered market after the Covid-19 pandemic eventually recedes.
About the Author
Joseph Anthony is an expat from Ireland who has lived in Thailand for the last decade. He has worked extensively in the media including editorial positions in Ireland and Thailand. He is focused on economic and business stories in Thailand as well as the expat lifestyle.