Thai Airways confirms reorganization in bankruptcy
Thai Airways, the national flag carrier of Thailand, will begin the reorganization process under the bankruptcy law. The airline has confirmed the news, adding that its operations would run as usual in the meantime.
Thai Cabinet has approved a plan of Thai Airways reorganization, which would be implemented under business bankruptcy chapter of the local law. In a statement issued on May 19, 2020, the airline said it would not be dissolved, enter liquidation, or be declared bankrupt, and would continue its normal operations, including passenger and cargo flights.
“THAI is committed to do everything possible to emerge from this crisis situation,” the statement read. “This is an important step for THAI to change in order to become a stronger and more sustainable entity.”
The carrier plans to resume full operations once COVID-19 crisis slows down. However, it will have to wait. On May 19, the airline announced suspending operations for another month, June 2020, after civil aviation authority banned international flights coming to the country until June 30, 2020.
On May 18, State Enterprise Policy Committee (SEPC), a government panel that oversees policies for state-run enterprises, already approved Thai Airways rehabilitation plan. However, the final decision, especially regarding the rehabilitation implementation, had to be made by the Cabinet.
Previous reports by the Thai media indicate that the carrier’s board of directors was less than welcoming of the bankruptcy court’s involvement. The move was allegedly viewed as a step that deprived the board of key decision-making.
The financial situation of the Thai airline has been in the red for the better part of the decade. Between 2013 and 2019, it had only one profitable year (in 2016), and was struggling to fight back against multiple crises, such as fierce competition, mellowing economic growth, airport capacity limits, trade wars, etc.
In 2018, after years of losses, the airline introduced its Rehabilitation Plan 2018 with the aim to achieve profitable business performance and improved service quality for higher customer satisfaction.
In November 2019, the airline had to dispel reports of liquidity problems after its president Sumeth Damrongchentham’s statements to employees had led many to believe the company was threatened by bankruptcy. In an official statement, Thai Airways claimed its president’s messages were “misconstrued” and assured its “capability to perform exceptionally amidst tough airline competition”.
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