MIAMI – Thai Airways (TG) may have a brighter future if the trend shown by its H1 2021 report continues during the course of the year.
The Bangkok-Suvarnabhumi (BKK) based airline has published its first-semester report which shows a profit of US$363.7m (THB11.1bn) comparing positively against a loss of US$840.3m (THB28.2bn) reported for the same period of 2020.
During the period being reported, TG and its subsidiaries were unable to carry out normal operations owing to the cancellation of flights, both in the domestic and international sectors, in force since March 2020. The only operations that remained possible were those of the ThaiSmile Airways (WE) subsidiary, all carried out on the domestic network from June 2020 onwards.
Even these limited operations were impacted by the extended epidemic and consequent travel restrictions which compelled the carrier to further reduce services. As a consequence, the only income available for TG was coming from freight carried on the international network along with repatriation flights.
Restructuring Plan Filed
To protect itself, TG filed for a restructuring plan with the Central Bankruptcy Court of Thailand, accepted in May 2020, that evolved into approval for a creditors’ meeting to be held on May 15, 2021, and a consequent rehabilitation plan to be headed by two administrators.
Several problems affecting the TG Group were identified and more than 600 actions to correct them were initiated including a revision of the business plan, restructuring of the organization to be able to increase competitiveness and services, as soon as the Covid pandemic permits, while taking steps to maintain financial liquidity and ensure future operations sustainability
Four Main Points Identified
- Staff costs reduction by adopting leave without pay and compensation scheme, and mutual separation plan thus reducing the number of employees
- Reduction in costs for aircraft leases with a Letter of Intent addressed to the lessors and indicating TG intention to review both operating and financial leases agreements. Also requested is a recalculation of the lease payment to be calculated on the actual operating hours (Power by the Hour)
- Reduction in operating costs by reducing the use of services and products and renegotiate agreements with trade creditors and service suppliers
- Increase revenues awaiting a return to a normal situation by maximizing revenue from cargo and repatriation flights, from ancillary activities such as flight simulators and special catering services, and from other revenues in order to increase cash flow.
On the last point considered, TG has taken actions to increase cash flow, to be used as working capital if and when business starts to recover.
In this view, TG has filed for permission from the Bankruptcy Court to sell secondary, not needed, or unused assets and lower the financial burden of their maintenance. This includes shares held by TG in the Bangkok Aviation Fuel Service Company (BASF), in NOK Air (DD), land, and buildings used as a training center or unused aircraft engines.
Article source: Thai Airways First semester 2021 Report
Featured image: Thai Airways Airbus 350-900 HS-THJ. Photo: Alberto Cucini/Airways