MIAMI – Thai Airways (TG) received its corporate restructuring clearance on Monday. The central bankruptcy court has said the company can proceed with the corporate reorganization plan, a crucial step for the carrier.
Thai Airways is in debt for around ฿350m (US$11bn), according to Chansin Treenuchagron, its interim president.
Thai Airways has gotten the green light from the court to appoint EY Corporate Advisory Services LTD and members of the carrier’s board of directors as debt renewal planners. The company aims to complete the restructuring process in five years. Chanchai Chaiprasit, chief executive officer of PricewaterhouseCooper’s Thai unit, said, “The court’s debt rehabilitation approval is just a tiny step. It’s an uphill task to come up with a debt plan that would satisfy banks, aircraft lessors, suppliers, and other lenders.”
Huge Losses for Thai air
Thai Airways was dealt a blow recently, when the nation’s Ministry of Transport identified potential corruption in underpricing of tickets and excessive overtime costs. Thailand’s Ministry of Finance owns around 48% of Thai Airways, according to an August filing.
The airline had defaulted on loans and bonds totaling 85 billion baht, or 33.1% of its total assets, according to its latest statement on July 22. It reported a net loss of 28 billion baht in the first half of this year, a more-than-fourfold jump from 6.44 billion baht during the same time a year ago as the carrier canceled scheduled flights from April to comply with government rules to contain the pandemic.
Financial Problems prior to COVID-19
By the time the pandemic hit, the national airline was not sailing in excellent waters. In fact, in May 2020, its situation was as follows.
With 51% of the company’s shares owned by the Thai government, the airline decided to take the road to bankruptcy when it did not secure a loan of US$2.8bn. This led to the closure of the Thai offices in Malpensa and the cancelation of the route to Bangkok. This move was detrimental to its situation.
Thai Airways Fleet
Thai Airways’ fleet is exclusively long-haul. It is comprised of A330-300, A350-900, and A380-800 aircraft with respect to Airbus; and 747-400, 777-200/200ER, 777-300/300ER, 787-8/9 as far as Boeing is concerned.
Previously, the Asian carrier also had the Airbus A340-600, removed due to excessive costs and often used on the Malpensa Bangkok route.
The company has decided to downsize the fleet, keeping in service the A350-900, Boeing 777-300ER, and the 787 family, the latter which fill up more easily and have very low maintenance costs. However, the most representative aircraft of the carrier remains the Boeing 747-400, which has been the spearhead of many airlines.
Today, airlines want efficient twin-engine planes, with the A350 and the Boeing 777/787 as the best choices for their high load factor and above all, re-enter costs.
Thai Airways A350-941 taxiing in Milan Malpensa Intl’ Airport (MXP). Photo: Andrea Ongaro @alphaoscaraviation