Thai Airways has submitted their business rehabilitation plan to creditors this week, outlining their cost cutting measures and intention to
raise THB 50 Billion from financial institutions to pay for early buyout-retirements and operational costs.,,THAI has not proposed any debt reduction to their creditors and instead proposed a 3 year debt repayment moratorium, a likely fatal decision that throws the entire bankruptcy process in limbo.
,Instead of asking the creditors to take a haircut and reduce outstanding debt now THAI plans to take on more debt – a whopping 50 Billion Baht [US$ 1.65 Billion] and then three years later miraculously repays it hoping for golden times.,When the
Bangkok Post reported about these plans this week it almost sounded like parody.,Reducing the amount of employees by 50% shows how inflated their staff numbers were over all these years. This mostly concerns ground staff but also old cabin crew and pilots with severely reduced duty hours. In short there is still a lot of fat to trim when it comes to the employment situation at Thai Airways, a company that has often been used as a parking lot for many people with certain connections. Need a cushy job? You’re in luck if you know someone who has influence at THAI.,Such a high reduction in employees with undoubtedly save a lot of money once operations restart whenever that will be.,,The number of destinations served and aircraft deployed will also shrink. That’s pretty much where the smart decisions stop,,To not ask creditors for a haircut in the situation THAI is in right now [410 billion baht debt] while being in an administration process is absolutely crazy. It sounds more like an intention to protect certain influential business people and institutions in Thailand from taking severe losses on their own books if they’re forced to write off the debt they have with Thai Airways.,THAI has amassed this US$14 Billion debt over a long time even though it has accelerated in the last few years. The company has no ability to repay such massive amounts of debt plus the new obligations. It’s inconceivable how such a plan could even be seriously considered let alone approved by the bankruptcy court at a later point.,If creditors were really unwilling to take the cut then I’d say take your chances in bankruptcy court and restart the entire company instead of making yet another attempt to restructure and taking on even more debt.,The financial institutions would be unlikely to lend any more money to Thai Airways unless the loan is guaranteed by the government.
THAI is no longer a state owned enterprise after having transferred ownership of some shares.,Let’s not forget there are still 15,000+ employees in limbo that depend on the airline or whatever will come of it as a source of income. Even more reason to do it right and make sure the airline can survive in the long run and not be an ongoing cash furnace.,Of course after revelations last month that
some Thai Airways employees have already declared themselves dead in order to cash in on allowances from their savings cooperative one has to wonder what else will surface.,Conclusion,The story of Thai Airways and it’s financial woes is becoming a never ending saga and while airline bankruptcies or restructuring usually take time very little has been achieved since last spring. This “Rehabilitation Plan” is really nothing like the name promises. It doesn’t reduce the debt which is the most fundamental issue THAI has right now.,Even with all restructuring in the world the company will be unable to repay the mountain of debt it has amassed. The right thing to do would be to realize this now while there is no business either way and allow the airline a financial reset by either taking a significant haircut on the debt or liquidating the company. I still have hope that the bankruptcy court would reject this plan as non-viable as it’s really just kicking the can down the road.,In the case Thai Airways would cease to exist it wouldn’t take very long for a new airline in name only to emerge like it has happened many times in the past with other carriers.,