Thai Airways aircraft are parked on the tarmac at Bangkok's Suvarnabhumi International Airport March 27, 2015. REUTERS/Athit Perawongmetha/File Photo
Thai Airways International Pcl (THAI.BK) won court approval on Tuesday to restructure a debt load of $12.9 billion as the airline, which is already in bankruptcy protection, seeks to turn around its fortunes.
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 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. read more
“We are satisfied with the decision,” Somboon Sangrungjang of law firm Kudun and Partners, which represents 87 saving cooperatives, told Reuters.
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 coronavirus pandemic grounded many flights across the globe, booking losses nearly every year after 2012.
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 was also reducing debt with airplane lessors.
Leasing agreements for 16 jets were being cancelled and the debt was being negotiated, Chief Financial Officer Chai Eamsiri told a news conference.
The airline was 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 it planned to cut its fleet size to 86 jets by 2025 from 103 now. Thai Airways says 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.
Thai Airways this month 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 about a thousand passengers in July.
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,” said Ben Kiatkwankul of the Maverick Consulting Group business advisory firm.
“The Phuket tourism sandbox flights will be an initial test.”
($1=31.1000 baht)
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