BANGKOK (AP) — Thailand’s Central Bankruptcy Court on Monday gave the go-ahead to financially ailing Thai Airways International to submit a business reorganization plan and appointed seven planners to oversee it.
A press release from the airline said the plan should be submitted to the court by the end of the year. Then, the company’s receiver will consult creditors for their input before the court approve’s the plan and appoints its administrator in early 2021. The plan will then be implemented.
Thai Airways International in May was carrying an estimated debt burden of almost 300 billion baht ($9.6 billion). Most recently, it ran up 12 billion baht ($383.3 million) in losses in 2019, 11.6 billion baht ($370.5 million) in 2018 and 2.11 billion baht ($67.4 million) in 2017.
Thailand’s Cabinet in May approved a reduction in the government’s stake in the airline to below 50% as part of the reorganization plan. That move was quickly implemented.
With the reduction in the 51% share held by the Finance Ministry, the airline lost its status as a state enterprise. The action also meant that the airline’s state enterprise union was automatically dissolved.
The airline initially sought a 54 billion baht ($1.7 billion) bailout loan from Thailand’s government after virtually ceasing operations due to the coronavirus crisis. Some domestic flights have resumed, but all regularly scheduled international flights are still banned.
The airline’s auditors, Deloitte Touche Tohmatsu Jaiyos, last month declined to sign off on Thai Airways’ financial statements for the first half of this year, saying a lack of liquidity and debt defaults prevented it from assessing its assets and liabilities.
The airline went a partial restructuring in 2015, when Prime Minister Prayuth Chan-ocha was serving a first term as prime minister in a military government established after a coup. The airline was already deeply in debt and needed to cut loss-making routes, reconfigure its fleet and get rid of staff through attrition.
It is almost certain to cut staff, fleet and flights under any new reorganization plan.
The airline was founded in 1960 as a joint venture between Thailand’s domestic carrier, Thai Airways Company, and SAS, Scandinavian Airlines System, which sold its stake in 1977. The airline’s shares were listed on the Stock Exchange of Thailand in 1991.
All six individuals nominated by Thai Airways International and approved by the court to oversee its reorganization are former or current directors of the airline, including former Royal Thai Air Force commander Chaiyapruk Didyasarin.
The remaining planner, EY Corporate Advisory Services Co, is affiliated with Ernst & Young Global Limited, best known for its accounting services.