BANGKOK: Thailand’s government is poised to push beleaguered Thai Airways International into bankruptcy protection in a move that would mark one more failure of a national flag carrier since the outbreak of Covid-19.
The cabinet of Prime Minister Prayuth Chan-o-cha will on Tuesday, May 19, be asked to consider a proposal from the transport ministry for a rehabilitation plan that would result in the restructuring of the lossmaking state-owned carrier after a bankruptcy filing in court, two senior government officials told.
“Today there was a meeting of the State Enterprise Policy Committee, which approved the transport ministry’s proposal to submit the rehabilitation plan to cabinet tomorrow,” said Thaworn Senniam, deputy minister of transport.
The airline, whose planes are adorned in purple livery and whose motto is “Smooth as Silk”, reported a net loss of Bt12bn in 2019 and Sumeth Damrongchaitham, its Chief Executive, quit his post in March.
THAI, majority owned by the Finance Ministry, has outstanding debt of about 92 billion baht of which approximately 78% is owed to bond investors, according to data..
Tris Rating Co, which is partly owned by S&P Global Ratings, said in a statement that the fact officials are considering filing for bankruptcy restructuring “has eroded our confidence that necessary actions from the government will be taken to enable THAI to meet all of its obligations in a timely manner.”
Tris Rating has downgraded its rating on Thai Airways and the carrier’s senior unsecured bonds to BBB from A.
“Holders of Thai Airways’ bonds are watching closely for details of its rehabilitation plan,” Thiti Tantikulanan, Senior Executive Vice president of Kasikornbank Plc, said at a seminar. “The impact on the overall bond market will be limited because Thai Air bonds have been mostly sold to a limited group of investors.”
THAI has posted annual losses almost every year since the start of 2013. The flag carrier was under pressure to turn around its performance even before the Covid-19 outbreak.
Shares in the carrier slid as much as 13% on Monday to the lowest level in more than a month. The stock has tumbled more than 90% from a peak in 1999.
Thailand banned most incoming commercial flights at the end of March, sending Thai Airways’ fleet and its more than 20,000 staff home on partial pay.
