After losing money for eight of the past 11 years, Thai Airways International said Tuesday it will file bankruptcy and submit to a court-supervised restructuring that will result in the state flag carrier finally being privatized.
The government’s State Enterprise Committee signed off on the U.S. Chapter 11-style restructuring May 18, an approval that was needed as the Finance Ministry owns 51% of the national flag carrier and de facto government taxi service.
Officials originally suggested yet more short-term loans backed by the ministry, but finally threw up the white flag over a carrier that has bungled its way to huge losses, a mangled reputation and also-ran status among world carriers.
The government tried to spin the move not as a bankruptcy and only a rehabilitation. But the former generals are simply playing semantics.
THAI Second Vice Chairman called it “an important step” for Thai Airways International to change in order to become a stronger and more sustainable entity.”
Having nearly crashed through the 2004 tsunami crisis, SARS, the Great Recession and two military coups, THAI finally ran out of fuel during the current coronavirus pandemic.
As of Dec. 31, THAI’s total liabilities stood at 244 billion baht ($7.6 billion), while its total assets were valued at 256 billion baht. Shareholder equity stood at 11 billion baht, only 4.6% of the company’s total assets.
The airline grounded its fleet after Thailand closed its borders to control the Covid-19 outbreak, a flight ban that was extended Monday. While THAI already cut wages and laid off employees, the threat of total insolvency loomed like an incoming monsoon.
Under Thai bankruptcy laws, an court-appointed receiver will supervise the rehabilitation and an automatic debt-collection holiday will take effect. The court then will appoint an executor to draft the overhaul plan. THAI can pick the executor its wants, but its creditors have the last word on both the personnel and the rehab plan. If both sides cannot come to terms, the court can lift the debt stay and the vultures can stark to pick apart THAI’s rotting carcass.
The end result almost certainly will be that the flying face of the Land of Smiles and one of Thailand’s greatest source of national pride will no longer be a state-run enterprise. While the unions oppose it, nearly all of its passengers and creditors would applaud it.
Deputy Prime Minister Anuthin Charnvirakul said THAI may lose its status as state enterprise once it enters bankruptcy. Once it does, the State Enterprise Committee no longer will have any say over the carrier. That could mean the end of government officails and their “VIP” cronies using the airline as their free, personal chauffeurs.
It also means that, like private carriers worldwide, THAI can more easily cut redundant staff and slash wages. Naturally, THAI’s unions don’t want that.
Union leader Nares Puengyam said workers agree with rehabbing THAI, but don’t want to see the government’s stake drop from 51 percent to only 2 percent. He claimed the union was concerned doing so would hurt the company’s credit rating and push up borrowing costs.
Oh, and then there’s that little matter of streamlining THAI’s bloated workforce.
As news leaked of THAI’s looming bankruptcy, cheers erupted across the internet from Thailand-based customers infuriated at their treatment over the years, despite often paying full fare for business or first class.
Netizens complained bitterly about being bumped from their fully paid seats for “VIPs” connected to the govenrment, palace or industry billionaires who demanded – and received – free flights and the best seats simply because of their perceived status in Thai society.
While THAI will continue flying while it undergoes its rehab, flyers hope that the airline that lands at the end of the journey will be a lot more competitive and value all of its customers more.