Thai Airways Confident in Its Rehabilitation Plan

[snoop1130]

Thai Airways Confident in Its Rehabilitation Plan

 

 

BANGKOK, March 3 (TNA) – The management of Thai Airways International (THAI) is confident that its creditors will endorse its rehabilitation plan on May 12 and it will resume international flights especially to Europe. 

 

Acting THAI president Chansin Treenuchagron said that in response to the Central Bankruptcy Court’s order for the airline to rehabilitate its business and appoint rehabilitation planners, the airline completed a rehabilitation plan and submitted it with the Legal Execution Department yesterday (March 2). 

 

The plan described that the airline had a total debt worth 410 billion baht but it accepted an accumulated debt worth 160-170 billion baht before Sept 14, 2020. 

 

Full Story: https://tna.mcot.net/english-news/line-today-english-news-647881

 

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[ThailandRyan]

Yet they need to lay off 50% of staff and fundraise another 50 Billion Baht, somethings a little off with the scheme. Confident they are as well with expecting THAI to post its profit again in 2023-2024. 

[SiamRead]

I truly wish that after the Government dumped them, they should engaged Professional Executives to run THAI. It is a good airline. 

[ThailandRyan]

3 minutes ago, SiamRead said:

I truly wish that after the Government dumped them, they should engaged Professional Executives to run THAI. It is a good airline. 

Was a good Airline at one time prior to it being cannibalized internally when it was taken on by the Government.  It could be good once again if it cut the chaff, and downsized, keeping the profitable routes while selling of the others as well as possibly combining with another airline.

[happysoul]

Thai airways is part of Star Alliance since May 1997

[law ling]

Good luck to them, but it seems like a massive debt, and they have limited earning capacity for the foreseeable future.

[Soikhaonoiken]

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[scorecard]

10 hours ago, law ling said:

Good luck to them, but it seems like a massive debt, and they have limited earning capacity for the foreseeable future.

So how they will they approach fares:

 

- Low fares but aiming to fill every flight and therefore get good overall revenues?

 

- High fares aiming to get big revenue but in reality not that many passengers, so total revenues per flight not that good?

[Sydebolle]

"The plan described that the airline had a total debt worth 410 billion baht but it accepted an accumulated debt worth 160-170 billion baht before Sept 14, 2020."

Correct, the difference of 250 billion Baht is approximately the amount stolen by all those hundreds of executives and thousands of staff. Inefficiency must have been written in capital letters all over everyone's job description .......

Close the shop, offer the traffic rights and slots to the highest bidders and cream off royalties. No airline to worry, no inefficient staff to manage (if they show up - that is) and only black figures in the books. 

Even in very difficult times for aviation like right now, the Vietnamese Thai Viet Jet flew many domestic flights within Thailand (Bangkok-Udon up to four services a day!) and reported a yearend result of a black Zero; Thai Airways kept its entire fleet on the ground and still keeps it there and manages to lose more than USD 1 million per calendar day. 

The writing is on the wall; in six months the carrier is declared bankrupt due to Covid-19, Corona or Wuhan-Bat-whatever; the real reason is that TG went down the pan quite a bit before already and the virus-story comes in more than handy to keep the dirty laundry invisible. 

An accumulated loss of more than USD 9 billion (not million - billion); professionalism explained, not in aviation but in accounting, bookkeeping and nepotism operation! 

[mtls2005]

A bit more detail here...

 

https://www.nationthailand.com/news/30403232

 

 

14 hours ago, snoop1130 said:

The plan described that the airline had a total debt worth 410 billion baht but it accepted an accumulated debt worth 160-170 billion baht before Sept 14, 2020. 

 

Not sure what to make of this?

[soi3eddie]

No mention of how well the sale of the old planes has gone. Did see this though: "In July, THAI would resume its international commercial flights to Paris, Frankfurt, Copenhagen, London, Zurich, Japan, South Korea, Manila and Jakarta, Mr Chai said.  (TNA)" So that could  just mean they know something about relaxed entry and quarantine rules. 

 

[Mr Meeseeks]

6 minutes ago, mtls2005 said:

A bit more detail here...

 

https://www.nationthailand.com/news/30403232

 

 

 

Not sure what to make of this?

If I was a creditor to Thai Airways I would be increasingly worried at this point.

 

Thai Airways debt was quoted at 350 billion baht a year ago, with another 140 billion on top from losses incurred this year.

 

The face loss here must be immense, and the show continues to try and pretend that the issues are minor and the airline is salvageable. 

[scorecard]

37 minutes ago, Mr Meeseeks said:

If I was a creditor to Thai Airways I would be increasingly worried at this point.

 

Thai Airways debt was quoted at 350 billion baht a year ago, with another 140 billion on top from losses incurred this year.

 

The face loss here must be immense, and the show continues to try and pretend that the issues are minor and the airline is salvageable. 

 Further, 4 to 5 years to reduce the staff by half?

 

What creditor would ever agree to this?

[Orton Rd]

What do 500 executives left from 750 at TG do all day?

[Mr Meeseeks]

3 minutes ago, scorecard said:

 Further, 4 to 5 years to reduce the staff by half?

 

What creditor would ever agree to this?

In my crystal ball I can see seized planes in Europe, decades old cases being dragged through the courts and continuously appealed to the highest possible levels, union action to prevent wage cuts and redundancies of staff, taxpayers' money being funnelled into this boondoggle in a desperate attempt to keep the gravy train going for the privileged few... etc.

 

Not confident that any of this is in Thailand's best interests but there we go. 

[ThailandRyan]

5 minutes ago, Orton Rd said:

What do 500 executives left from 750 at TG do all day?

Play cribbage, I mean dominoes, oh hell they probably just drink coffee and eat the famous donuts all day long.

[mtls2005]

TG is talking up a FRA-HKT-FRA service starting "next month".

 

No clue on service? Maybe 1x or 2x weekly? 4x weekly?

 

https://flights.thaiairways.com/en/flights-from-frankfurt-to-phuket

[GinBoy2]

So I never claim to be a high flying company turnaround guru, but I do work in commercial aviation and have seen my fair share of airline restructures.

 

Honestly I could have written this restructuring plan on the back of a cocktail napkin, sat at the bar enjoying a cocktail in less than 10 minutes.and it took them how long?

[ThailandRyan]

6 minutes ago, GinBoy2 said:

So I never claim to be a high flying company turnaround guru, but I do work in commercial aviation and have seen my fair share of airline restructures.

 

Honestly I could have written this restructuring plan on the back of a cocktail napkin, sat at the bar enjoying a cocktail in less than 10 minutes.and it took them how long?

Unfortunately, I believe that they are still trying to shield money somewhere.

[mtls2005]

36 minutes ago, GinBoy2 said:

Honestly I could have written this restructuring plan on the back of a cocktail napkin, sat at the bar enjoying a cocktail in less than 10 minutes.and it took them how long?

 

Well very few people have seen the full "plan" so far. Yes, some details have been leaked.

 

Until creditors approve this plan, on/around 12 May, I doubt we'll see it? Maybe someone will leak it?

 

I seriously doubt that your U.S. airline bankruptcy "experience" (Ch. 11 one hopes) has much relevance in Thailand. Nor that you could come up with a plan in 10 minutes? But, maybe you're "special"?

 

 

 

 

[Searat7]

No sane creditors would approve a plan without a very experienced CEO with airline turnaround experience being brought on board and of course this person would be a foreigner. 
 

I read somewhere they have been secretly borrowing to pay employees and other expenses as they said before they were running out of funds last December. I wonder if the government has been funding them. 
 

The Nation article said they would be a private full service airline yet a couple of sentences later they talk about extra income from seat selection and baggage fees. Ridiculous. 

 

If their plan did not include making good on all the refunds owed to passengers then many future customers would be alienated and unwilling to use THAI again. They should have started the staff reduction program long ago. A very sad and impossible situation made worse by Covid.

[scorecard]

1 hour ago, mtls2005 said:

 

Well very few people have seen the full "plan" so far. Yes, some details have been leaked.

 

Until creditors approve this plan, on/around 12 May, I doubt we'll see it? Maybe someone will leak it?

 

I seriously doubt that your U.S. airline bankruptcy "experience" (Ch. 11 one hopes) has much relevance in Thailand. Nor that you could come up with a plan in 10 minutes? But, maybe you're "special"?

 

 

 

 

 Point taken but it is true that many/most company rehabilitations follow the same 4 or 5 basic/critical big picture points, to some extent because of applicable laws.

[mtls2005]

59 minutes ago, scorecard said:

it is true that many/most company rehabilitations follow the same 4 or 5 basic/critical big picture points

 

Let's be honest here, THAI is better suited for a Chapter 7, than a Chapter 11. Best to get out the pillow and gently put the old gal down.

 

THAI has very few assets, and what can they offer customers? Direct, non-stop service to/from BKK. That's it. They won't have enough aircraft for daily service to more than a few European destinations. 

 

But instead of doing the difficult thing, they'll just buff it up, slap some lipstick on it and lose another billion dollars.

 

 

 

 

[mr_lob]

17 hours ago, happysoul said:

Thai airways is part of Star Alliance since May 1997

and??

[Burma Bill]

21 hours ago, snoop1130 said:

is confident that its creditors will endorse its rehabilitation plan

 

 

[GinBoy2]

20 hours ago, mtls2005 said:

 

Let's be honest here, THAI is better suited for a Chapter 7, than a Chapter 11. Best to get out the pillow and gently put the old gal down.

 

THAI has very few assets, and what can they offer customers? Direct, non-stop service to/from BKK. That's it. They won't have enough aircraft for daily service to more than a few European destinations. 

 

But instead of doing the difficult thing, they'll just buff it up, slap some lipstick on it and lose another billion dollars.

 

 

 

 

Well that was kind of my point in the earlier post.

 

They need to decide what they want to be. Full service legacy, LCC, or some hybrid midrange airline.

 

Once you decide that, then you build a fleet structure and employees to service that mission.

 

All I see at least are random thoughts of cutting people, selling assets and reducing the number of airframe types, nothing that to me at least suggests what is the ultimate destination.

 

In the US, post 9-11 all the legacy airlines had huge restructuring where they essentially abandoned secondary routes and farmed them out to regional airlines, Skywest, Endeavor Mesa and the like, where the crews are paid a fraction of mainline. 

 

In Europe the model was either full LCC, or the legacy airlines created subsidiaries where again the cost structure was substantially lower.

 

I have tried to look at Thai Smile, and since they never break it out from the Thai International consolidated balance sheets, it's really hard to tell what their cost structure is. But the cynic in me tells me it's just 'lipstick on a pig'.

 

As for the fleet. China Airlines (thats the Taiwanese one) operates with 90 aircraft, including freight yet seems to be able to service 100+ destinations, and like TG is almost a wholly widebody fleet.

 

There is one difference however, and again this comes back to what do they want to be.

 

The good thing that has happened over the past 30 years is that air travel cost/mile has plummeted, being that airline margins are wafer thin. Airlines like CI, SQ have robust business & first class travel where margins are much higher, and thats where they make their money, not from the cattle in the back.

 

TG, I would argue is predominately a tourist airline, where that business class travel is thin.

 

So then you are all the way back to what do they want to be, and how to you structure yourself to be successful in that market, not some fantasy world.

 

If they can't, or won't do that, you're right, time to put a bullet in it!

[mtls2005]

26 minutes ago, GinBoy2 said:

All I see at least are random thoughts of cutting people, selling assets and reducing the number of airframe types, nothing that to me at least suggests what is the ultimate destination.

 

And new BMI maximums for FAs (male and female)