Thai Airways one step closer to bankruptcy

Thai Airways International is a step closer to restructuring via a bankruptcy court after a key government panel backed the plan, which is due for consideration by the Cabinet on Tuesday.

The State Enterprise Policy Committee that oversees policies for state-run enterprises agreed that the airline should seek such a rehabilitation, a government spokeswoman told reporters on Monday.

The board of management has agreed to Chapter 11 type of procedure because this will allow the Thai Finance Ministry to inject bail. According to Thai law, a company has to file for bankruptcy first, until a government can inject a certain amount of money to the company. There will be no sale of assets or liquidation. Only a restructuring, and for that to occur, the company has to go bankrupt (at least) on paper.

Thailand’s borders are restricted under a state of emergency through May and most inbound international flights are banned until the end of June, though some domestic flights have restarted.

Thai Airways, which is majority-owned by the Finance Ministry, has an outstanding debt of about 92 billion baht (€2.65 billion) of which approximately 78% is owed to bond investors, according to data compiled by Bloomberg.

Tris Rating Co said in a statement that the fact officials are considering filing for bankruptcy restructuring “has eroded our confidence that necessary actions from the government will be taken to enable THAI to meet all of its obligations in a timely manner.”

THAI has posted annual losses almost every year since the start of 2013. The flag carrier was under pressure to turn around its performance even before the Covid-19 outbreak.

Source: The Bangkok Times