Thai Airways ponders bankruptcy as it enters rehab

[webfact]

Thai Airways ponders bankruptcy as it enters rehab

ByThe Thaiger

 

PHOTO: AJ Wood

 

Thai Airways, which turns 60 years old this month, recorded a net loss of US$66 million in 2017, US$361 million in 2018 and US$374 million last year. As the airline contemplates getting its grounded planes back in the air, it’s now confronted with a PR disaster at home as the government ponders a bailout valued around 60 billion baht, around US$1.8 billion.

 

Thai social media has turned on the national carrier wondering why they are eligible for a massive state bailout and loans whilst many Thais, now out of work, are struggling to get their 5,000 baht hand-out from the government or end up waiting in food queues each day.

 

Now it emerges that one of the options could be putting the ailing airline into bankruptcy as an option to enable its rehabilitation. Ultimately the decision will be made by the Thai cabinet but the Thai Aways board has been resisting vital restructure for a decade, and filing for bankruptcy is seen as an option to take the key decisions out of their hands.

 

Now it emerges that one of the options could be putting the ailing airline into bankruptcy as an option to enable its rehabilitation. Ultimately the decision will be made by the Thai cabinet but the Thai Aways board has been resisting vital restructure for a decade, and filing for bankruptcy is seen as an option to take the key decisions out of their hands.

 

Thailand’s Finance Minister, Uttama Savanayana, says the government is open to the option but is looking at all possibilities for the national carrier. The government is a 51% shareholder. Rehabilitation of the airline could be enabled by an order from the bankruptcy court, or by the State Enterprise Policy Committee approving a rehabilitation plan.

 

Mr Uttama says that “time has run out, and the operator must change. While all parties try their best to solve the problem, there must be serious co-operation between them.”

 

Meanwhile, the Thai PM, Prayut Chan-o-cha has agreed to the moves towards rehabilitation for Thai Airways. And Deputy PM and Health Minister, Anutin Charnvirakul, said that several internal rehab plans have been conducted, but with no success. Another new option would involve debt

rehabilitation with each of the lenders providing $300,000 or more. But the proposed plan will have to be decided by Thai Airway’s shareholders.

 

As reported by Simple Flying, the restructuring of Thai Aways under the government rehabilitation plan will involve cutting down the size of its fleet. Spending cuts would also mean job losses as the airline battles for survival.

 

Source: https://thethaiger.com/hot-news/transport/thai-airways-ponders-bankruptcy-as-it-enters-rehab

 

 

-- © Copyright The Thaiger 2020-05-18

 

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[kotsak]

Amy Winehouse's song Rehab springs in mind.. ????

[Vigilante]

Terrible time for any rehabilitation, restructuring or anything of the sort.

Air travel in the dole-drums for the next year or so, no sane investor will be pouring any money in a bloated, bankrupt company

 

[Andrew65]

9 minutes ago, Vigilante said:

Terrible time for any rehabilitation, restructuring or anything of the sort.

Air travel in the dole-drums for the next year or so, no sane investor will be pouring any money in a bloated, bankrupt company

 

The one thing with Thai is obviously the close relationship with Thailand's tourism sector, I couldn't see the Gvt letting it fail for that reason.

[mr mr]

48 minutes ago, kotsak said:

Amy Winehouse's song Rehab springs in mind.. ????

they thai'd to make me go to rehab i said no no no ? 

[PatOngo]

1 hour ago, kotsak said:

Amy Winehouse's song Rehab springs in mind.. ????

The Beatles "I'm a Loser" rings truer! The loss of FACE for the demise of the national carrier into bankruptcy must be enormous! Who can they blame?

[tribalfusion001]

Don't really a national carrier with no tourists coming.

[OnTheRun]

They should bite the bullet and appoint a non Thai as CEO. I'd suggest they approach the Japanese guy who turned JAL around, he worked miracles there.

[RandolphGB]

The only answer is for the airline to be sold to an experienced foreign group. They’d turn it around within a year and it would become profitable. 
 

Of course, that would never happen as it would it would expose the systematic corruption and cronyism rooted in the airline, which no sensible business group would tolerate and immediately set out ending. 
 

Plus, the loss of face would be too much to bear to have foreigners running their national airline.

[bruceprior]

However it turns out I have a feeling that I should have taken the refund instead of rolling over the ticket until BNE -> BKK comes back to life!!

Crossing my fingers.......

[keithkarmann]

3 minutes ago, bruceprior said:

However it turns out I have a feeling that I should have taken the refund instead of rolling over the ticket until BNE -> BKK comes back to life!!

Crossing my fingers.......

Still waiting for my refund 4 weeks now.

[moojar]

22 minutes ago, RandolphGB said:

The only answer is for the airline to be sold to an experienced foreign group. They’d turn it around within a year and it would become profitable. 
 

Of course, that would never happen as it would it would expose the systematic corruption and cronyism rooted in the airline, which no sensible business group would tolerate and immediately set out ending. 
 

Plus, the loss of face would be too much to bear to have foreigners running their national airline.

I wonder who owns the 49% not controlled by the government?  Presumably traded on the Thai stock exchange and presumably bought by Thai people.  Did they not know better?   

[Hayduke]

2 hours ago, webfact said:

Thai social media has turned on the national carrier wondering why they are eligible for a massive state bailout and loans whilst many Thais, now out of work, are struggling to get their 5,000 baht hand-out from the government or end up waiting in food queues each day.

 

Why?....it's simple. The Generals and their Hi-so friends need a means of free, all purpose air travel. We can't expect the nation's elite to actually pay for their airline tickets, now can we? Screw the the Lo-so out-of-work people....they don't matter.

 

 

Edited May 18, 2020 by Hayduke

[stouricks]

2 hours ago, webfact said:

Now it emerges that one of the options could be putting the ailing airline into bankruptcy as an option to enable its rehabilitation. Ultimately the decision will be made by the Thai cabinet but the Thai Aways board has been resisting vital restructure for a decade, and filing for bankruptcy is seen as an option to take the key decisions out of their hands.

I read this the first time. Proof readers?

 

Oopps, sorry, cannot say this.

Edited May 18, 2020 by stouricks

[trainman34014]

'Pondering' is not going to solve the problems; we all know what needs to be done including the Half Wits at the Airline and in the Government....so why not just get on and do it ?

[miamiman123]

66million loss???

How many generals are flying free???

 

[AhFarangJa]

5 minutes ago, miamiman123 said:

66million loss???

How many generals are flying free???

 

ALL of them, plus their immediate and extended families, Mia Noi's, Secretaries, etc.

[scorecard]

47 minutes ago, moojar said:

I wonder who owns the 49% not controlled by the government?  Presumably traded on the Thai stock exchange and presumably bought by Thai people.  Did they not know better?   

[AhFarangJa]

3 hours ago, webfact said:

Ultimately the decision will be made by the Thai cabinet but the Thai Aways board has been resisting vital restructure for a decade, and filing for bankruptcy is seen as an option to take the key decisions out of their hands.

 

Of course not, there are just too many people with the hands in the till, and far too many people travelling on freebie tickets every day.

[Netzero]

Let's be honest - Thai Airways has been terribly managed just based on it's service, its prices, age of its fleet, and where it flies to. Privatize it, get international management in and on the board and bring it back to life (eventually after COVID) on par with Eva or Singapore Air. Thai Airways used to be very good years ago - shame but it can't stay the way it is and survive. 

[Dukeleto]

I hate to say this but put anyone else in to run the thing except a person who's nationality is the same as the carriers name and who isnt beholden to anyone there or in the government and tasked specifically to turn it around and their renumeration based soley on their success.

Sooo it will be bankrupcy or bailout with the cycle of abuse and missmanagment uninterupted. Wash, rinse and repeat!

[Bob12345]

1 hour ago, OnTheRun said:

They should bite the bullet and appoint a non Thai as CEO. I'd suggest they approach the Japanese guy who turned JAL around, he worked miracles there.

While that sounds like a good idea, the whole point of having a national airliner is to have nice paying spots for all your friends on the board and free flights for everyone you know. After the next coup the retiring airforce generals need some sort of income.

If this guy turns it into a regular airliner, there is no point of having it in the first place. 

[sahibji]

very sad. it is a nice airline and i have used it extesively previously. hope they come out of their problems and continue to operate.

[Huckenfell]

1 hour ago, OnTheRun said:

They should bite the bullet and appoint a non Thai as CEO. I'd suggest they approach the Japanese guy who turned JAL around, he worked miracles there.

Any competant CEO could turn it around provided he is NOT a Thai.

 

[baansgr]

3 hours ago, Vigilante said:

Terrible time for any rehabilitation, restructuring or anything of the sort.

Air travel in the dole-drums for the next year or so, no sane investor will be pouring any money in a bloated, bankrupt company

 

ChiThai or ChinThai Airways sounds good

[Huckenfell]

1 hour ago, RandolphGB said:

The only answer is for the airline to be sold to an experienced foreign group. They’d turn it around within a year and it would become profitable. 
 

Of course, that would never happen as it would it would expose the systematic corruption and cronyism rooted in the airline, which no sensible business group would tolerate and immediately set out ending. 
 

Plus, the loss of face would be too much to bear to have foreigners running their national airline.

And thereby lies the problem, corruption is at the top. Ask the question, Why are there so many different type of aircraft, well it's all about "back handers" from various aircraft manufacturers going to the persons responsible for Aircraft procurement. A new CEO would need to scrap all those aircraft and customise his new fleet, as soon as possible.

 

 

[yellowboat]

3 hours ago, Vigilante said:

Terrible time for any rehabilitation, restructuring or anything of the sort.

Air travel in the dole-drums for the next year or so, no sane investor will be pouring any money in a bloated, bankrupt company

 

True, but making big changes during a time of lousy business opportunities makes sense.   Things are always cheaper in down cycles, and when things do pick up, you are ready.  While the military runs Thailand, I will never fly THAI.   

[new2here]

3 hours ago, Vigilante said:

Terrible time for any rehabilitation, restructuring or anything of the sort.

Air travel in the dole-drums for the next year or so, no sane investor will be pouring any money in a bloated, bankrupt company

 

I’m not so sure about that.  Clearly, one major part of that process would be conditioned on TG being able to access the larger capital markets (ie bonds, equity) in any post-restructuring scenario.

 

Looking at the Bank of Thailand’s (BoT) latest public bond offerings they issued a 3yr note on May 7th which had a bid coverage ratio in excess of 2.00. They also issued a 4.5yr note on May 13th with bid coverage above 3.25....

so... it appears to me, even in this COVID environment, that state debt notes are still in high demand (any bid cover ratio above 2.0 signals a strong demand by investors)

 

Therefore, I’d argue that with the right traunch maturity schedule matched with the correct asset-backed collateralization, a post-restructured TG could in fact find adequacy financing.

 

naturally to do all this also means that most all common equity holders will be wiped out entirely, severely liquidated or be required to accept substantial restricting of their equity position.

 

To me the larger issue for Thai isn’t their immediate financial restructuring issue per se.. it’s the willingness of the existing leadership and general public to accept the reality as to where Thais’ business is really at right now and going forward AND also accept the painful (but IMHO necessary) steps that it needs to make in order to put them back onto any semblance of a legitimately viable long-term business operating without the need for constant state-backed equity infusions.

[Huckenfell]

1 hour ago, bruceprior said:

However it turns out I have a feeling that I should have taken the refund instead of rolling over the ticket until BNE -> BKK comes back to life!!

Crossing my fingers.......

Lucky for you that you were not flying with Air Asia, i had 2 flights cancelled, but was only given the chance to request a voucher for later flights. Incidentally , to date i have only received 'promises.

[Pinot]

This isn't promising to hear from a business that owes me B40000 for cancelled flights. I imagine my equity position is somewhere near the bottom of the dumpster

 

Edited May 18, 2020 by Pinot