After years of financial losses, Thai Airways is seeking government’s approval of its rehabilitation plan, and reportedly a $1.8 billion cash injection, to turn the matters around. While the government is seemingly willing to keep its national carrier afloat, latest media reports indicate that rehabilitation plan might be submitted to bankruptcy court. The airline itself denies bankruptcy reports.
On May 18, State Enterprise Policy Committee (SEPC), a government panel that oversees policies for state-run enterprises, approved Thai Airways rehabilitation plan. The plan is now due to be considered by the Cabinet, which is expected to make a decision on the matter as soon as May 19.
However, media reports indicate that Thai Airways would be rehabilitated in compliance with the bankruptcy law. “The State-Enterprise Planning Office agreed in principle for the rehabilitation of Thai Airways in court… the procedure will be submitted to cabinet tomorrow,” government spokeswoman Narumon Pinyosinwat said, as reported by Reuters.
On the same day, Thai Airways issued a statement in which it addressed the rehabilitation plan and bankruptcy procedure. In it, the airline refers to claims that its board of directors was allegedly planning to ask the State Enterprise Policy Committee (SEPC) to submit its rehabilitation plan to the country’s bankruptcy courts (and some requests to the U.S. bankruptcy court). “Thai Airways would like to clarify that our board resolution does not conform to the news,” the statement reads.
Instead, “Thai [Airways] has done the rehabilitation plan and it was already approved by our Board of Directors on April 17, 2020, as well as the State Enterprise Policy Committee […] on April 29, 2020. At the present, our rehabilitation plan is currently underway to present to the Cabinet for further rehabilitation resolution,” as noted in the statement.
Thai Airways board of directors allegedly view filing for bankruptcy protection as a move that would deprive it of key decision-making.
On May 5, 2020, the Prime Minister of Thailand already indicated that the government might be willing to support the national carrier’s turnaround, if the airline entails a comprehensive restructuring. However, the support would also be the “last chance” for the airline, the prime minister said back then.
Thai Airways is reportedly seeking a $1.8 billion (THB58.1 billion) emergency state loan to survive the COVID-19 crisis and implement its rehabilitation plan. The government holds a 51% stake in the airline.
Between 2013 and 2019, Thai Airways had only one profitable year ‒ in 2016. In 2018, Sumeth Damrongchaitham was appointed as the company’s president to turn the business back into profitability. In the same year, the airline began implementing the Company’s Rehabilitation Plan 2018. However, Thai Airways ended 2019 with a net loss of $371 million (THB12 billion).