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Thai Airways Wins Court Approval To Restructure Debt

Published on Jun 17 2021 10:49 AM in General Industry tagged: Thai Airways

Thai Airways Wins Court Approval To Restructure Debt

Thai Airways International Pcl has won court approval to restructure a debt load of $12.9 billion as the airline, which is already in bankruptcy protection, seeks to turn its fortunes around.

Court Ruling

The court ruling removes the last hurdle to implementation of the plan, seen as critical for the carrier which last year posted a record loss of about $4.5 billion.

In its order, the Central Bankruptcy Court in Bangkok said that it approved the rehabilitation plan. It did not make any changes to the plan that had been approved by creditors.

A hearing was postponed after two complaints filed against the plan by certain creditors.

"We are satisfied with the decision," Somboon Sangrungjang of law firm Kudun and Partners, which represents 87 saving cooperatives, told Reuters.

Committee Of Five

A committee of five, including the airline's acting chief executive, Chansin Treenuchagron, and its former CEO, Piyasvasti Amranand, will administer the plan, which covers the airline's debt of 400 billion baht ($12.86 billion).

Piyasvasti helmed the airline the last time it was profitable from 2009 to 2012.

The airline was in difficulty well before the COVID-19 pandemic grounded many flights across the globe, booking losses nearly every year after 2012.

Restructuring Plan Information

The restructuring plan for 170 billion baht worth of debt relies heavily on debt extensions and debt-to-equity conversions, and limits most of the haircuts to late interest payments, Somboon said.

The airline is also reducing debt with airplane lessors.

Leasing agreements for 16 jets are being cancelled and the debt is being negotiated, chief financial officer Chai Eamsiri told a news conference.

The airline is in talks with government and private financial institutions to obtain 50 billion baht in new capital to support its cash flow, he added.

In March, the carrier said that it planned to cut its fleet size to 86 jets by 2025 from 103 now. Thai Airways says that it has cut 30 billion baht in expenses.

The Thai government holds a 47.86% stake in the carrier, but it is not governed by the country's state-enterprise law.

Anticipating Tourism

This month, Thai Airways resumed routes between European cities and the resort island of Phuket in Thailand, anticipating a government scheme to allow vaccinated tourists to skip a mandatory quarantine.

It expects to carry approximately 1,000 passengers in July.

Analysts' Opinions

Analysts blame internal inefficiencies for the carrier's trouble with budget and long-haul rivals.

"Thai Airway's challenges are mainly institutional and inefficiency. The airline should rely less on government support to ward off external influence and professionalise management," Ben Kiatkwankul of the Maverick Consulting Group business advisory firm said. "The Phuket tourism sandbox flights will be an initial test."

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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