Aug. 31 – Thai Airways International Plc (THAI) is aiming to regain its place among the world’s top ten airlines after the completion of its rehabilitation process, the national airline’s executives have said.
The airline has planned to forge strategic partnerships with various private companies, including Thailand’s largest energy conglomerate PTT Plc, as part of its business rehabilitation program.
The carrier will ask creditors tomorrow for approval of its revised recovery plan which is a crucial step for the airline’s financial recovery.
“There’s probably no problem [for the plan approval]. The plan is the way to rehabilitate the airline’s financial condition and benefit creditors,” said Piyasvasti Amranand, chairman of the THAI committee overseeing the airline’s rehabilitation plan.
Mr Piyasvasti told the Bangkok Post that THAI had slipped to be among the world’s top 30 airlines as it began its rehabilitation process. This all happened amid the protracted Covid-19 pandemic which has significantly affected global aviation activity, he said.
Mr Piyasvasti admitted that the entry into judicial rehabilitation proceedings had affected the airline’s operations and services, leading to negative reviews from passengers about the airline.
For example, he said, the company was unable to refund passenger tickets after its flights were unable to operate during the pandemic due to restricted conditions as part of its rehabilitation processes. debt.
But the company has seen its business improve significantly, thanks to a rebound in tourist arrivals and reduced costs due to corporate restructuring.
Mr Piyasvasti said the carrier went from a loss of 9 billion baht in earnings before interest, taxes, depreciation and amortization (EBITDA) posted in the second quarter of 2021 to a profit of 168 million baht during the same period of this year. Continuous improvements were observed in July and August.
THAI’s acting chief executive, Suvadhana Sibunruang, said he was confident the airline would regain its rank in the global top 10 once the rehabilitation process is complete and when the company’s shares resume trading in the market in 2025. .
In recent years, the airline has undergone corporate restructuring to reduce costs and improve efficiency.
Part of the cost reductions was a mutual separation program which resulted in a reduction in personnel from 29,000 to 14,400 at present, including 3,800 aircrew and approximately 900 pilots. This reduced the payroll from 2 billion baht per month to around 700 million baht currently.
THAI has also reduced its fleet of 103 planes to 61, 20 of which belong to its subsidiary Thai Smile Airways.
As part of THAI’s debt restructuring, the carrier is considering potential candidates to begin its first-ever private partnership deal.
The most likely venture is national oil and gas conglomerate PTT, as it already has excess capital to quickly inject and reinvigorate the struggling airline.
THAI has been in talks with other potential partners, including some foreign companies, to serve as a strategic partner and shareholders to diversify its business into various related fields such as logistics, catering and freight transportation.
Mr Piyasvasti said that after rehabilitation, the finance ministry would retain no more than 50% of the airline, ending the airline’s status as a public company.
However, the government will remain the majority shareholder with a combined 43% stake, with 33% held by the Ministry of Finance and the remaining 10% owned by Krungthai Bank (KTB) and other public shareholders.
So far, passenger numbers have rebounded significantly, especially on European routes which account for around half of THAI’s total revenue.
The rest comprises 20% of routes in Northeast Asia, including Hong Kong, Japan, South Korea and Taiwan; 10% of South Asian routes such as India and Pakistan; 10% of southeastern routes such as Indonesia; and the remaining 10% from Australia and elsewhere.
So far, THAI’s main markets that have maintained outbound travel restrictions are China and Japan, Piyasvasti added.
THAI went bankrupt last year to restructure 400 billion baht of debt.
Under the revised restructuring plan, THAI aims to seek a new term loan of up to six years and/or a bond with the same term up to 12.5 billion baht.
It may also apply for a revolving facility up to the same amount.
THAI also aims to increase its share capital by approximately 31.5 billion shares with the aim of positive equity for the stability of its financial situation. As a result, THAI shares may resume trading on the Stock Exchange of Thailand.
The carrier expects to receive full equity from the debt and capital restructuring under the 80 billion baht proposal and complete its capital restructuring by 2024.
If this process can be completed under the proposed plan amendment, THAI’s equity would be positive in 2024 and the shares would likely trade again in 2025.
In the second quarter, THAI and its subsidiaries recorded total revenue excluding one-time transactions of 21.5 billion baht, up 282% year-on-year. Net losses of 3.2 billion baht were recorded in the period, compared to a net profit of 23.3 billion in the same period last year, due to one-time transactions with a net profit of 27.1 billion during this quarter.
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