Strong disagreement in long cabinet meeting to discuss THAI airways future, says Thai media

[webfact]

Picture: Daily News

 

In a report laced with conjecture Daily News reported that Thailand's prime minister had ordered his ministers to "button up" after the cabinet failed to reach agreement on the future of THAI airways.

 

He didn't want the future of the airline being discussed in a public free for all before decisions are set in stone.

 

The beleaguered and former state enterprise is due to enter rehabilitation but there was reportedly strong disagreement in a two hour cabinet meeting yesterday. 

 

At one point a clearly exasperated Prayuth Chan-ocha apparently said "so what do we want to do about it?"

 

With two ministers speaking via video conference because of Covid related matters, Thai Rath reported that the finance minister , DMP Wissanu Krea-ngam and transport minister Saksayam Chidchob all had their say.

 

A major stumbling block is that the finance ministry still is a major shareholder in the company yet it has relinquished its State Enterprise status after going into administration. 

 

A 25 billion baht bailout was proposed by the finance ministry but this met with severe opposition. 

 

The upshot was there was no resolution but to proposed three alternative ways forward including rehabilitation, a return to state enterprise status or a bailout using a fund known as Vayuapak Fund 1. 

 

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[Phuketshrew]

Hardly surprising that the piggies are against depleting the swill trough by 25 billion baht  ...

[ChipButty]

Looks to me like there is no future

[Mr Meeseeks]

Ok so a THB25 billion bail out is being considered but what about the other 500 billion it owes?

 

It won't be able to fly anywhere unless it services those debts as we have see plane seizures before. 

[Mr Meeseeks]

1 hour ago, webfact said:

The upshot was there was no resolution but to proposed three alternative ways forward including rehabilitation, a return to state enterprise status or a bailout using a fund known as Vayuapak Fund 1. 

There's a fourth option which seems not to have been considered; just let it die. 

 

The three ways forward all involve using taxpayers' money to bail it out, and only rehabilitation will have any chance at fixing the root causes of why it doesn't work, and that is a very slim chance at best. 

[holy cow cm]

Thai is owned by : Finance Ministry (Government), Thai NVDR company Ltd 99.98% owned by the Stock Exchange Thailand, Government Savings bank,  Vayupak Fund 1 MFC started by the Government and major shareholder is Government Savings Bank, Vayupak Fund 1 Krungthai bank,  etc etc etc. So what do all of these major share holders have? Correct! And what do these shareholders all have in common, they are all intertwined in each others companies as investors. Look farther and there are dormant shell companies set up and of course that is the tip of the tough feed iceberg. All smoke and mirrors. Anyway, I like Thai Airways for domestic travel, so I hope it survives. How they can say itr is not a State owned enterprise is beyond me.

[ikke1959]

Thai airways its owner is the head of state in Thailand and so it can't go bankrupted.. But it is a waste of money, it would be better used to resolve the poverty in Thailand instead of keeping on the multi rich here 

[zhounan]

China, knock knock: "I hear you need a substantial recapitulation"

[Dogmatix]

Yup. This is really a tough one but I am sure the self appointed COVID Czar's new powers will cover this problem, on the grounds that it was caused by COVID, and enable him to solve it. From the numbers that have been bandied about it is not clear that all the ministers have a clear grasp of the size of the problem though.

 

THAI had been losing money for years before COVID and has wiped out all of its shareholders' funds. The accounts may not be accurate as the auditor qualified them saying he was unable to express an opinion on the accuracy as he had not received requested evidence.   Anyway, whether accurate or not THAI admitted to  negative 130 billion baht in shareholders' as at December 2020 and this will probably be close to 200 billion by mid 2021, as net losses appear to be about 150 billion baht a year at the moment. 

 

The 25 billion baht of taxpayers' funds request from the Vayupak Fund will enable THAI to struggle by maybe till the end of this year but will be wiped out as further losses, if injected as equity, as Vayupak has done in the past, and will not solve its problems.  Cashflow from operations of THAI is better than its net profit because it has heavy depreciation and amortisation costs of aircraft on financial leases and buildings amounting to about 120 billion a year. That means that 25 billion could plug the operating cashflow deficit for about 9 months till things pick up.  But it also needs at least 300 billion baht to get shareholders' funds up to a a moderately positive level in order to be able to take on commercial debt and leases again.    

[Rampant Rabbit]

2 hours ago, webfact said:

He didn't want the future of the airline being discussed in a public free for all before decisions are set in stone.

Heaven forbid  in a democracy like  Thailand.

[ozz1]

talk about flogging a dead horse just let it collapse and give the money to those who need it but this is Thailand they will lose face 

[Rampant Rabbit]

39 minutes ago, Dogmatix said:

Yup. This is really a tough one but I am sure the self appointed COVID Czar's new powers will cover this problem, on the grounds that it was caused by COVID, and enable him to solve it. From the numbers that have been bandied about it is not clear that all the ministers have a clear grasp of the size of the problem though.

 

THAI had been losing money for years before COVID and has wiped out all of its shareholders' funds. The accounts may not be accurate as the auditor qualified them saying he was unable to express an opinion on the accuracy as he had not received requested evidence.   Anyway, whether accurate or not THAI admitted to  negative 130 billion baht in shareholders' as at December 2020 and this will probably be close to 200 billion by mid 2021, as net losses appear to be about 150 billion baht a year at the moment. 

 

The 25 billion baht of taxpayers' funds request from the Vayupak Fund will enable THAI to struggle by maybe till the end of this year but will be wiped out as further losses, if injected as equity, as Vayupak has done in the past, and will not solve its problems.  Cashflow from operations of THAI is better than its net profit because it has heavy depreciation and amortisation costs of aircraft on financial leases and buildings amounting to about 120 billion a year. That means that 25 billion could plug the operating cashflow deficit for about 9 months till things pick up.  But it also needs at least 300 billion baht to get shareholders' funds up to a a moderately positive level in order to be able to take on commercial debt and leases again.    

Take a  massive marketing leap like tesco Lotus and rename it "Thai'sssss"

[Pattaya Spotter]

43 minutes ago, Dogmatix said:

Yup. This is really a tough one but I am sure the self appointed COVID Czar's new powers will cover this problem, on the grounds that it was caused by COVID, and enable him to solve it. From the numbers that have been bandied about it is not clear that all the ministers have a clear grasp of the size of the problem though.

 

THAI had been losing money for years before COVID and has wiped out all of its shareholders' funds. The accounts may not be accurate as the auditor qualified them saying he was unable to express an opinion on the accuracy as he had not received requested evidence.   Anyway, whether accurate or not THAI admitted to  negative 130 billion baht in shareholders' as at December 2020 and this will probably be close to 200 billion by mid 2021, as net losses appear to be about 150 billion baht a year at the moment. 

 

The 25 billion baht of taxpayers' funds request from the Vayupak Fund will enable THAI to struggle by maybe till the end of this year but will be wiped out as further losses, if injected as equity, as Vayupak has done in the past, and will not solve its problems.  Cashflow from operations of THAI is better than its net profit because it has heavy depreciation and amortisation costs of aircraft on financial leases and buildings amounting to about 120 billion a year. That means that 25 billion could plug the operating cashflow deficit for about 9 months till things pick up.  But it also needs at least 300 billion baht to get shareholders' funds up to a a moderately positive level in order to be able to take on commercial debt and leases again.    

$10B seems a bit on the high side to get a medium sized airline up and running again.

[connda]

Sell it to someone who is capable of managing an airline.

[Cake Monster]

8 minutes ago, connda said:

Sell it to someone who is capable of managing an airline.

No Investor on the Planet would even look at Thai Airways.

It has a very poor Asset value , with old non efficient Aircraft.

It has qwizillions of Baht debt.

It is poorly managed 

And to top it all, its owned by a Military Government essentually.

[RichardColeman]

3 hours ago, webfact said:

The upshot was there was no resolution but to proposed three alternative ways forward

1.  A new committee to look into it

2. A new committee to to look into the propositions of the first new committee

3. A new committee to approve the propositions put forwards by the second new committee

[herfiehandbag]

2 hours ago, Mr Meeseeks said:

There's a fourth option which seems not to have been considered; just let it die. 

 

The three ways forward all involve using taxpayers' money to bail it out, and only rehabilitation will have any chance at fixing the root causes of why it doesn't work, and that is a very slim chance at best. 

There will be a massive bailout, and the government will assume responsibility for the debts. There may be another term used, and various financial devices used, but that will be smoke and mirrors, A bail out is what it will effectively be.

 

Remember who this government answers to. Demise of the national airline would simply be an unacceptable loss of face. Once resumed, business will continue as before.

[mfd101]

Bailout or no bailout, you'ld have to be increasingly optimistic (now) about your own future to entrust your life to such an airline ... old inefficient aircraft, poorly managed, no spare cash ...

[hotchilli]

4 hours ago, webfact said:

The upshot was there was no resolution but to proposed three alternative ways forward including rehabilitation, a return to state enterprise status or a bailout using a fund known as Vayuapak Fund 1. 

There is a fourth option.. but they don't want to hear that one, as no money is involved.

[Fromas]

1 hour ago, Cake Monster said:

It has qwizillions of Baht debt.

 

Difficult to know with 100% degree of certainty. It might be somtamillions of Baht.

 

[Scott Tracy]

4 hours ago, zhounan said:

China, knock knock: "I hear you need a substantial recapitulation"

Recapitalisation?

[Golden Triangle]

Just let it crash and burn - only figuratively of course ????

[Burma Bill]

6 hours ago, webfact said:

"so what do we want to do about it?"

 

[Scott Tracy]

One would think, unless Thai Airways has filed for bankruptcy protection everywhere, anywhere it flies, it will have lien on its assets in no time.

[digger70]

6 hours ago, webfact said:

A major stumbling block is that the finance ministry still is a major shareholder in the company yet it has relinquished its State Enterprise status after going into administration. 

 

A 25 billion baht bailout was proposed by the finance ministry but this met with severe opposition. 

 Let it go man It's a Lost course .

No matter how much money he want's to put in Thai. they will never make a profit  

Too many pigs at the trough ,It looks like he's a Big one.

[Tubulat]

6 hours ago, zhounan said:

China, knock knock: "I hear you need a substantial recapitulation"

So, soon or late it is named China Airlines.

[herfiehandbag]

3 hours ago, Scott Tracy said:

One would think, unless Thai Airways has filed for bankruptcy protection everywhere, anywhere it flies, it will have lien on its assets in no time.

Perhaps this will be the next phase in the saga?

 

The government bails out Thai Airways, "restructuring"(a.k.a. cancelling) debts owed within the country, and does a "Hopewell"on any debts held by foreign entities.

 

Not a very bright move (for reasons you have suggested), not very bright, but then...

[Fromas]

3 minutes ago, herfiehandbag said:

does a "Hopewell"on any debts held by foreign entities

 

Never in a million years. THAI does not enjoy sovereign immunity, and their planes will be seized the second they land on a foreign tarmac.

[Andycoops]

Thai airways is a dinosaur in the 21st century world of the airline business and is not fit for purpose.

It should be allowed to die.

However, I suspect this won't happen because of the old culturistic mantra of losing face and therefore billions more will be thrown at the corpse.

[talahtnut]

Stick to selling doughnuts.

Heaps of tourist wont be arriving like they did in the old days.