Thai Airways rehabilitation may take up to seven years, legal advisor says

[webfact]

Thai Airways rehabilitation may take up to seven years, legal advisor says

 

FILE PHOTO: Thai Airways idle airplanes are seen parked on the tarmac of Suvarnabhumi Airport in Bangkok, Thailand May 25, 2020. REUTERS/Jorge Silva

 

BANGKOK (Reuters) - The rehabilitation of flag carrier Thai Airways International Pcl <THAI.BK> may take up to seven years, the airline's legal advisor said on Monday.

 

After the bankruptcy court allows the rehabilitation, its planners may take five months to a year to draw up the plan, Kitipong Urapeepatanapong, told a news briefing. The rehabilitation timeframe would be five years, extendable for up to two years.

 

After courts approve the plan, an administrator will be appointed. Thai Airway's first hearing is scheduled for August 17.

 

"The Thai Airways rehabilitation plan should conclude within 7 years, which can include debt to equity conversions, selling assets or an equity injection," he said.

 

(Reporting by Chayut Setboonsarng; Editing by Martin Petty)

 

-- © Copyright Reuters 2020-06-08

 

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[rasmus5150]

I really don't think that Thai Airways will exist in 7 years.

[steven100]

Who's going to care how long it takes, they won't be around in 7 weeks  ....  let alone 7 years.

Employees will all be gone, management will be dismissed and gone.

They have no cash to operate, they are bankrupt.

International creditors are owed billions of baht.

 

[steven100]

does that mean those 16 planes are for sale ....  

[Justgrazing]

1 hour ago, webfact said:

 

"The Thai Airways rehabilitation plan should conclude within 7 years

As far as rehab' goes that's quite a stretch .. This is blind arrogant stupidity .. T A is a dead loss .. Any chance of resurrection would require proper aviation experts ( outsiders ) not ex big wigs of PTT .. This whole bankruptcy thing is just a sham to limp it along without having to face up to the realities the rest of the aviation industry is having to face up to ..

Edited June 8, 2020 by Justgrazing
Sp

[Anton9]

Thailand will be among the countries facing more economic consequences of this scamdemic, even though they barely had an outbreak.

Edited June 8, 2020 by Anton9

[DrTuner]

The chances of that rehab working are just about as good as they were for Amy Winehouse.

[trainman34014]

Ah; a Corruption Extension of seven years, time for some people to rake in a few more million before it's too late !

[impulse]

By then, the statute of limitations will have expired for most of the corruption they'll eventually uncover.  And it will be business as usual.

 

[phkauf]

I can't see the lessors of the aircraft willing to accept that schedule. Delayed or massively reduced payments while their collateral rapidly depreciates - not going to happen. A court in the US (where those contracts are likely governed) would probably not approve of it. 

Just proposing such a ridiculous plan shows one of two thing: massive incompetence or massive corruption. In the case of THAI, I think it's probably both. 

[samran]

2 minutes ago, phkauf said:

I can't see the lessors of the aircraft willing to accept that schedule. Delayed or massively reduced payments while their collateral rapidly depreciates - not going to happen. A court in the US (where those contracts are likely governed) would probably not approve of it. 

Just proposing such a ridiculous plan shows one of two thing: massive incompetence or massive corruption. In the case of THAI, I think it's probably both. 

Yeah, but ultimately the Thai government doesn't care. For a government which has dragged its feet on projects like Hopewell, 7 years is light speed.

[wordchild]

34 minutes ago, samran said:

Yeah, but ultimately the Thai government doesn't care. For a government which has dragged its feet on projects like Hopewell, 7 years is light speed.

The Thai Government may not care but the aircraft lessors certainly do; they will likely want their planes back, (at least the new ones eg the 787,s).  Thai will need to be careful where it flies these planes 

too when they can operate again! 

The Thai Govt think (I guess) that they have hatched a cunning plan to shaft the international creditors (and the Thai debenture holders)  and avoided providing more support to the airline; saving face all around.

Personally i feel this looks likely to end badly and the Thai Government will end up suffering a fair degree of damage to its reputation. Also a fair amount of dirty laundry will be exposed as this process moves forward, i suspect.

    

[webfact]

THAI should take no more than seven years to recover

By The Nation

 

 

Once the creditors are listed and classified within two months after the rehab plan is established, Thai Airways International (THAI)’s rehabilitation should be completed within seven years.

 

Meanwhile, Onanong Chuhaman, chief of THAI’s Investor Relations Department, said the airline’s stock has been given the “C” grade due to overwhelming debt caused by stiffer competition, open skies policy and the effects of the Covid-19 crisis.

 

The carrier filed a request for rehabilitation with the Central Bankruptcy Court on May 26, which the court accepted the following day. The airline’s stock was marked down to C in the Stock Exchange of Thailand (SET), though trading is allowed with a cash balance account. The creditors have until August 13 to object to the rehab request, before the court launches an inquiry on April 17. The court is expected to order THAI to start working on its rehab plan by end August or early September.

 

Once the court agrees to the list of rehab planners proposed by THAI, the team of planners have three months to complete the plan and should have it ready by January 2021. Then creditors will be brought together to consider the plan between February and March 2021, while the court should approve the plan by April.

 

The plan, once approved by the court, should be implemented within five years. The airline will only be allowed to extend the deadline twice and by no more than a year each time.

 

So far, THAI has named EY Corporate Advisory Services Co Ltd, THAI chairman Chaiyapruk Didyasarin, acting president Chakkrit Parapuntakul as well as independent directors, namely Pirapan Salirathavibhaga, Boontuck Wangcharoen, Piyasawat Amranan and Chansin Treenuchagon as rehab planners.

 

Preliminary rehab solutions include:

 

- Debt restructuring and negotiating with creditors as well as finding additional sources of funds to enhance short-term liquidity and adjust capital structure in the long term;

 

- Improving routes and removing those that are not profitable;

 

- Improving the organisation and business units related to aviation by boosting flexibility in management services such as setting up a subsidiary, looking for new opportunities and increasing the profits of different business units;

 

- Improving the commercial strategy and ability to bring in revenue;

 

- Improving the organisational structure by reducing repetitive and unnecessary tasks, increasing working capacity in each business unit so it is consistent, adjusting the number of employees and benefits etc.

 

Kitipong Urapeepatanapong, chairman of the law firm Baker & McKenzie, which is THAI’s law adviser, said it will take between three months and a year to consider the airline’s rehab plan. After that, it should take about five years to implement the plan. Hence, he said, THAI’s rehab procedure should take no more than seven years to complete.

 

THAI has been negotiating with its creditors who have leased planes to the airline, and many are allowing the carrier to continue as per normal. The airline has also filed for business rehab in two countries and has, so far, had good results.

 

Kitipong confirmed that so far, no creditors have cancelled the lease or seized a plane operated by Thai Airways. He added that THAI’s board of directors decided against resorting to filing Chapter 11 in the US for global protection because negotiations with foreign creditors are quite good, though it will be used as a last resort.

 

As for procuring funds, Thai Airways will no longer be granted loans or guarantees by the Finance Ministry because the airline has lost its state-enterprise status. However, it can borrow from financial institutions under the court’s approval.

 

The finding of future funding sources depends on the rehab planners’ decision on how much will be spent on finding new partners, increasing capital or selling assets etc.

 

Source: https://www.nationthailand.com/business/30389267

 

-- © Copyright The Nation Thailand 2020-06-09

 

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[phkauf]

36 minutes ago, webfact said:

Kitipong Urapeepatanapong, chairman of the law firm Baker & McKenzie, which is THAI’s law adviser, said it will take between three months and a year to consider the airline’s rehab plan. After that, it should take about five years to implement the plan. Hence, he said, THAI’s rehab procedure should take no more than seven years to complete.

 

THAI has been negotiating with its creditors who have leased planes to the airline, and many are allowing the carrier to continue as per normal. The airline has also filed for business rehab in two countries and has, so far, had good results.

Reminds of the saying: How do you know when a lawyer is lying? His mouth is moving.

Typical nonsense from a lawyer pushing his client's agenda. 

And the lessors can always file for involuntary bankruptcy in the US if THAI doesn't file there. Surprised the esteemed counsel didn't mention that or perhaps he doesn't understand basic US Bankruptcy Law. 

[JonnyF]

16 hours ago, steven100 said:

Who's going to care how long it takes, they won't be around in 7 weeks  ....  let alone 7 years.

Employees will all be gone, management will be dismissed and gone.

They have no cash to operate, they are bankrupt.

International creditors are owed billions of baht.

 

Yes they will. Your hero will bail them out again with the public's money, and once there is money flowing through the books again that money will be redirected into the pockets of him and his cronies.

 

In a few years they'll be broke again due to the mismanagement and corruption so the cycle will start again. 

 

Nice work, if you can get it.

[bluesofa]

52 minutes ago, webfact said:

Thai Airways International (THAI)’s rehabilitation should be completed within seven years.

I think by the time THAI is rehabilitated, aeroplanes will be obsolete and we'll have moved on to Jetsons space travel:

[Bender Rodriguez]

rehab? how they will do that?  they never made any profits... what is the future plan ?  less billions per year loss ?

[Srikcir]

I expect creditors will not agree to  7 year rehab plan, especially when THAI has been unable to rehab itself for the last 7 years while increasing its debt.

Maybe a 2 year rehab plan but the first year will be encumbered with some tough milestones to be met or the plan immediately terminates and creditors demand complete liquidation.

[kingstonkid]

17 hours ago, steven100 said:

Who's going to care how long it takes, they won't be around in 7 weeks  ....  let alone 7 years.

Employees will all be gone, management will be dismissed and gone.

They have no cash to operate, they are bankrupt.

International creditors are owed billions of baht.

 

In most bankruptcies the company is able to function on a a limited basis.  The administrator usually puts money aside to pay bills or to guarantee payments at again a limited amount.  Yes some employees may get laid off but they will still be operating.  

[Matzzon]

Not more than 7 years. Eehum??? Oki, that´s great!

[jayboy]

8 minutes ago, Srikcir said:

I expect creditors will not agree to  7 year rehab plan, especially when THAI has been unable to rehab itself for the last 7 years while increasing its debt.

Maybe a 2 year rehab plan but the first year will be encumbered with some tough milestones to be met or the plan immediately terminates and creditors demand complete liquidation.

I don't see a way out that doesn't involve TG operating as a very much smaller airline.TG was overextended and with a wrecked balance sheet well before the current pandemic.Other legacy airlines like BA, Lufthansa and Air France are aware they face an unprecedented crisis with operations and staff needing huge cuts.But these airlines, unlike TG, were financially healthy at 31.12.2019.They are also companies that face up to problems.For the directors and senior management of TG, financial viability (how to put it politely) is not perhaps their primary concern.Some credit however to Prayuth for grasping the nettle.

[Stargeezr]

With the new normal, I do no see how free flights for, share holders, pilots

families, staff, or even the Thai owners, if Thai Air even plans to be open beyond

two years. Of course this is Thailand and they know best, right?  So if you have some tickets

and can use them, do it..  I am glad that I do not have any Thai air reward points that

 I am planning to use in the future/   I think that Thai Air will need an absolute

miracle to survive.

Geezer

[whiteman]

The Sky is falling no sorry Thai airways are falling very very fast and the little piggies with there noses in the money bags will be found out some will run some will hide and some will be sacrificed. Long may it last

[natway09]

They need to bite the bullet & hire specialist planners first

[Sydebolle]

Is it me alone who is smelling a nasty rat here? 

 

[Bender Rodriguez]

6 hours ago, phkauf said:

THAI has been negotiating with its creditors who have leased planes to the airline,

can we know WHO owns those planes?  the military ?  secret shareholders ?  a company in panama ?

[holy cow cm]

Guess the broke the mirror to not see themselves. 7 more years of bad luck.

[Sydebolle]

Once those seven years are over, it might turn Egyptian with a follow-up of a seven-year period of drought and famine during the reign of pharaoh [still blank, but most likely not the Uncle].

 

In the meantime the party can go on, carry on running a National airline with nothing but ignorant arrogant friends of the establishment on the top floor. Take while the taking is good and as long as the tax payer is willing to fork the necessary change. Meanwhile the creditors will be trying to keep those outstandings alive; for many things the Thai (among other countries) accounting systems have statutory limitations of five years. 

Happy days are here again ............ 
 

 

[Ketyo]

Oh dear. Prayut has killed the economy even though they only had the same number of deaths as for 3 days of road accidents. 

 

There is one lesson in this.  You don't want the army in charge in times of economic crisis.  They only know how to ban things, crackdown on things and stop people from doing things.....like making money.

 

They don't have the first idea about how to strengthen and economy or a society. Oh dear. 

 

Welcome to Myanmar mark II.  They haven't learned the lesson.

[rickudon]

11 hours ago, webfact said:

As for procuring funds, Thai Airways will no longer be granted loans or guarantees by the Finance Ministry because the airline has lost its state-enterprise status. However, it can borrow from financial institutions under the court’s approval.

What financial institution would Loan Thai Airways money? They do understand that loan = gift! I suppose a big fat brown envelope might make a difference.